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National Broadband Network Select Committee
28/11/2013

HEAZLETT, Mr Mark, First Assistant Secretary, Department of Communications

RENWICK, Mr Robin, Assistant Secretary, NBN and Moorebank Shareholder Branch, Department of Finance

ROBINSON, Mr Ian, Deputy Secretary, Department of Communications

Committee met at 0 9:03

CHAIR ( Senator Lundy ): Good morning, everybody. I declare open this public hearing of the Senate Select Committee on the National Broadband Network. I welcome you all here today. The committee's proceedings will follow the published program. This is a public hearing and a Hansard transcript of the proceedings is being made. Before the committee starts taking evidence, I remind all witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee, and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to a committee.

The committee prefers all evidence to be given in public, but under the Senate's resolutions witnesses have the right to request to be heard in private session. It is important that witnesses give the committee notice if they intend to ask to give evidence in camera. If a witness objects to answering a question, the witness should state the ground upon which the objection is taken, and the committee will determine whether it will insist on an answer, having regard to the ground on which it is claimed. If the committee determines to insist on an answer, a witness may request that the answer be given in camera. Such a request may, of course, also be made at any other time.

I remind senators that the Senators resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about how and when policies were adopted. Officers of the department are also reminded that any claim that it would be contrary to the public interest to answer a question must be made by a minister and should be accompanied by a statement setting out the basis for the claim.

On behalf of the committee I would like to thank all witnesses appearing today for their cooperation with this inquiry. I welcome representatives from the Department of Communications and the Department of Finance. Do you wish to make a brief opening statement before we go to questions?

Mr Robinson : No, thank you.

Senator CONROY: The committee was hoping Ms Mason was available. What is the circumstance of her being unavailable?

Mr Renwick : There is a longstanding meeting between the Minister for Finance and Ms Mason to take him through the work and the priorities of the Business, Procurement and Asset Management group that Ms Mason heads up. It has been in the diaries for three or four weeks now.

Senator CONROY: I accept that; it is a very reasonable position. In fact, I would indicate that I have a number of questions for Ms Mason directly, and I am sure we will be having another hearing in the not-too distant future, so I will be hoping that I will get a chance to ask Ms Mason some questions. How long have you worked in the NBN area of Finance?

Mr Renwick : Approximately six weeks.

Senator CONROY: Yes, I did not think I had seen you before. I had a bit of contact over the last five to six years with the officials in the Department of Finance, and your face did not seem familiar. Had you worked in an area associated with the NBN project before?

Mr Renwick : No, not with the NBN. My background is some commercial business enterprises. I was looking after the Moorebank project within Finance.

Senator CONROY: So other than the last six weeks you actually have no knowledge of any NBN related issues, other than what you will have got up to speed on in six weeks? I am sure you would readily admit that on a project this size it will take a little bit longer than six weeks—maybe seven!

Mr Renwick : I do have some background in some of the equity issues, some of the financing issues that were relevant to the Moorebank project and directly relevant to the NBN project.

Senator CONROY: I appreciate that Moorebank was a very large infrastructure project. I am not sure that it is directly comparable, but that is not a reflection on your knowledge of both the important workings of the financial aspects of that or the NBN. Is there anybody else who is here with you who, if I ask a question that is beyond your six weeks' worth of knowledge, is able to assist in the committee's work?

Mr Renwick : I have got a representative here, a more junior person that has been involved for a long period of time.

Senator CONROY: Excellent. Can they wave? How are you? I thought I recognised your face.

Mr Robinson : Senator, it might help when looking at our representation today—and we looked at the terms of reference and I suppose we thought that it went more to the future policy arrangements—if I explain that we have established within the department a task force to look after NBN policy issues.

Senator CONROY: Who is on that? Is it joint?

Mr Robinson : It is in the department but it includes Finance and Finance secondees, and secondees from other agencies.

Senator CONROY: Mr Renwick?

Mr Robinson : Not Mr Renwick, because he is in the main part of Finance. But in terms of progressing the policy issues, that is being led out of the Department of Communications and it does include some joint officers working on various elements. I am the lead official for that, hence I—

Senator CONROY: I know you have quite a bit of experience. We will see how we go—and good luck to both of you. I want to start by understanding the revenue model of NBN Co and how that impacts on the overall business case for NBN Co. Could you step me through that?

Mr Robinson : In terms of the revenue model?

Senator CONROY: Yes.

Mr Robinson : I would say that is a better question for Mr Heazlett, I think.

Senator CONROY: I was hoping to talk to Mr Mason who is someone, like Mr Heazlett, who is an expert on these things. I am happy to take a response from Mr Heazlett. Could you take me through the revenue model?

Mr Heazlett : The revenue model for NBN Co, as published in its last corporate plan, involves a set of varying charges. There is a charge for the basic access service that varies according to the speed service that the end-user requires. Then there is an interface charge which is basically fixed, and it is my recollection that there are two levels. Then there is a component of the charge which the RSP pays depending on the amount of committed capacity on the shared components that the RSP acquires. The model is based on distribution of various access speeds being acquired and those access speeds progressing upwards in terms of speed—

Senator CONROY: That is the tiers?

Mr Heazlett : Yes, the tiers.

Senator CONROY: What are the tiers?

Mr Heazlett : The tiers start at a 12.1 service, then proceed to a 25.5, then a 50.20, as I recall, then 100.40, and there was proposed to be introduced gigabits-down and 400-up service, which has not as yet been released—

Senator CONROY: It has been announced that it is going to be done—you are not aware of any information that is not going to be done?

Mr Heazlett : No.

Senator CONROY: You said 'proposed'—

Mr Heazlett : It is not actually in service as yet, as I understand it.

Senator CONROY: No, that is correct. But you are not aware of any decisions taken that would not put that. I have not either, but you used the word 'proposed'—

Mr Heazlett : I am not aware of the precise date on which it will come into service either.

Senator CONROY: But you are not aware of any decision not to proceed with that?

Mr Heazlett : No.

Senator CONROY: So that is speed tiers.

Mr Heazlett : Then there is the network interface where there are two levels of charges—and I would have to seek information on that. Then there is the CVC, the connectivity virtual circuit, which is charged currently at $20 per megabit of dedicated capacity for a RSP. That is projected to increase, in terms of the revenue model, at a range of about 20 per cent per annum over the period of the 30-year projections based on current increases in data capacity of 50 per cent per annum.

Senator CONROY: So that is the method with which the revenue is calculated. What impacts on the revenue levels—the actual dollars coming in the door?

Mr Heazlett : The impacts on that are the number of connections that are achieved, the services that are taken up, the amount of usage or the amount—

Senator CONROY: The gigabit plans or—

Mr Heazlett : Yes—and the amount of capacity that RSP decides to purchase and how much contention they might allow in their own controlled network environment. They are the factors. Another factor is the number of wireless-only homes that do not take fixed lines.

Senator CONROY: We talked about the five basic consumer products that have been announced. There have been a range of other products announced as well. Could you take me through them? There are business-grade services.

Mr Heazlett : Yes, there are business-grade. I would have to remind myself of the details of those, I am afraid.

Senator CONROY: Something called multicast. I was hoping for an explanation of multicast.

Mr Heazlett : A multicast service has been released, yes. That involves the distribution of a common signal by an RSP over the network so that end users can access what is essentially a broadcast service over the fibre. That, as I recall, is charged at $5 per service for a basic-capacity multicast service. I must admit I have forgotten whether there are upgrades of the higher levels of multicast available.

Senator CONROY: I believe they have been trialling multicast. I am not sure if it is available yet.

Mr Heazlett : I will have to take it on notice and check whether it is actually in service and whether there are any users of it at the moment.

Senator CONROY: Yes. I thought it was trials, but I have been out of circulation for awhile. A lot can happen in five or six months.

Mr Heazlett : It certainly has not been a high-revenue item at the moment.

Senator CONROY: I was not aware that there were any being used commercially. How important are revenue generation and the level of revenues to achieving the 7.1 per cent rate of return, which I believe is the current rate of return in the business plan?

Mr Heazlett : The revenue is a key component of that return. The return is calculated on the basis of the internal cash flows within the company. If there is the same level of outgoing cash flow and a reduced level of in-flow then the rate of return will be lower, but it is entirely dependent on the combination of the two.

Senator CONROY: Sure. Mr Renwick, what is your experience of how important revenues are on the rate of return on your other projects and possibly what you have gleaned so far on the NBN?

Mr Renwick : From a start-up point of view the revenue streams in the future are very important. NBN is, from a commercial point of view, what a company needs to do.

Senator CONROY: To meet a rate of return, revenues may be important?

Mr Renwick : They are extremely important.

Mr Robinson : Essential, I would say.

Senator CONROY: Essential, extremely important—probably a reasonable position to take. Mr Renwick, you may have some experience when you have a start-up. I think you used the word 'start-up', which is what the NBN was, so I am interesting in pursuing why you inserted the word 'start-up'. I think I understand, but I just want to tease you out on that. For a start-up, is it more vital for revenue to flow?

Mr Renwick : I think it is more vital to have future potential revenue streams. There is an expectation, I think, with any start-up business that in the initial periods revenues may not meet the initial cost.

Senator CONROY: So, when you have big start-up costs and big capex costs, revenues are unlikely in the early stages of any infrastructure project. You indicated that you have some experience in this area, and you have clearly worked on a very significant one.

Mr Renwick : It was exactly the same with the Moorebank project: there are some very significant costs to get the project up and running, and the expectation is that until you have actually built something—for example, until the intermodal terminal at Moorebank is actually operational—there will not be any revenue streams.

Senator CONROY: Are you aware of any infrastructure projects at all where revenue exceeded capex costs from day one?

Mr Renwick : Not that I am aware of.

Senator CONROY: You have never seen one, and you have some experience in these things. I have not, but I just wanted to get your much broader experience than mine. Mr Robinson, you look keen to say something.

Mr Robinson : I think that, almost by definition, infrastructure projects are highly capital intensive and it takes time to do that. I could not think of an example.

Mr Renwick : Until you have an income-generating asset, the start-up costs will exceed the revenues.

Senator CONROY: So, in a case like the NBN, is it reasonable or accurate to say that, all other things being equal, take-up on deployed infrastructure and ARPU levels have a bigger impact on returns than initial capex costs?

Mr Heazlett : I think that essentially, given that the return is a measurement of both, in a sense they have the same influence, although if you are having a positive return then you need more incoming than outgoing. So if your measure is a positive return then revenues become more important to achieve a positive return.

Senator CONROY: But to generate the revenue you need take-up of the service providers.

Mr Heazlett : Yes.

Senator CONROY: So getting take-up, to get a positive return and future income streams, is a key measure.

Mr Robinson : Yes.

Senator CONROY: At the hearing of the Joint Committee on the NBN in April of this year, NBN Co. set out some detailed financial information on the NBN. Again, apologies, Mr Renwick; you are probably not familiar with that hearing. You would not have been there and I doubt anyone has bothered to draw your attention to that particular one. But I am keen to get Finance's perspective on this, as well as that of the former DBCDE. So apologies, Mr Heazlett. It is not that I am not interested in your views; I just want to get a combined view. At that hearing NBN Co. set out some detailed financial info on the NBN, including information on the cost per premise for rolling out the fibre network. You may not be familiar with the specific hearing, but the information is now more generally known and was a matter of, I think, some discussion at estimates last week. Mr Payne gave some evidence, but I just want to get your understanding of that. Are you familiar with the evidence Mr Payne gave last week?

Mr Renwick : Yes.

Senator CONROY: The information stated that NBN Co.'s estimate at completion—EAC, to use one of their many acronyms; I am sure you have learnt a lot of new ones in recent weeks—that the cost per premise of rolling out the fibre network—the LNDN—and the customer connect is currently between $2,500 and $2,600 per premise, made up of between $1,400 to $1,500 for the LNDN and $1,100 for the customer connect. Are you familiar with that information? I am certain Mr Heazlett is, but I just want to—

Mr Renwick : I have seen the evidence given at the Senate committee.

Senator CONROY: I am very confident that Ms Mason will have. I note that you had estimates on at the same time, so you may not have been able to be paying attention with bated breath to NBN's appearance. Do you have any more recent information on the cost per premise for the NBN fibre network?

Mr Renwick : I do not, I am afraid.

Senator CONROY: I am talking about information back in April and then some information last week. Mr Robinson, is there any more recent information?

Mr Robinson : Not currently, but of course that is right in the field of the strategic review that is being undertaken.

Senator CONROY: No, the actual costs of deployment are not in the field of review. The costs are the costs. I am just trying to ascertain whether this information is accurate—whether Finance has run the ruler over it, whether the Department of Communications has run the ruler over it.

Mr Robinson : As it currently stands, we have no reason to doubt what was said at Senate estimates last week. But, independently of NBN Co. management, the strategic review is looking at costs and costs going forward.

Senator CONROY: I appreciate that, but I am not asking about what they are doing into the future. I am trying to establish some facts. Information provided to the parliament, to the departments and to estimates last week all seems to be the same. What I am trying to establish is whether there is any new information. Mr Renwick, I am not sure how many times you have had the opportunity to visit and meet with NBN Co. officials, but I know that Ms Mason was a regular visitor, probably more regular than Mr Heazlett and Mr Robinson. How many times have you had a chance to catch up with NBN officials to satisfy yourself about the accuracy of the information you have so far been provided?

Mr Renwick : I have a fortnightly meeting with the CFO, I have a weekly meeting with their government relations people and I have had joint meetings with various representatives from the Department of Communications.

Senator CONROY: That is what I was expecting you to say. I am pleased to see that is still going on. That has been going on for awhile, hasn't it?

Mr Renwick : That has been going since I started.

Senator CONROY: And before you?

Mr Renwick : And before I started. It was put in place before I started and it has just continued.

Senator CONROY: But it has been a long ongoing process; it is not something you instituted?

Mr Renwick : My understanding is that it has been going on for a period of time.

Senator CONROY: Mr Heazlett, have you always been attending those meetings with Finance or have they just been holding them for themselves? You have been involved longer, so have Finance and Communication both been—

Mr Heazlett : No, not joint meetings with the CFO.

Senator CONROY: They have been in place for a long period of time and Finance has been doing that?

Mr Renwick : That is right.

Senator CONROY: You have a fairly good view of the information that is kicking around inside—I mean the finance department, not you personally; you are obviously getting up to speed. Have you seen anything in your short period or on file—and I am sure Ms Mason and others kept extensive file notes—that suggests those costs, which were estimates in April, which seem to have firmed up by estimates last week, are inaccurate?

Mr Renwick : No.

Senator CONROY: So you have been seeing actual invoices, if I can use that word?

Mr Renwick : No, we do not get into that sort of detail. It is high level. The company report on their position on various financial aspects.

Senator CONROY: So you can confirm those figures—I appreciate you have six weeks experience—from your weekly meetings, plus the public evidence, that those numbers are accurate? They are not estimates anymore; they are actuals?

Mr Renwick : They are the numbers provided by the company.

Senator CONROY: You are not suggesting there is fraud involved in the company, are you?

Mr Renwick : No. They are the numbers provided by the company. We accept the numbers that the company has provided to us.

Senator CONROY: I am looking for the confidence that you believe they are accurate.

Mr Robinson : It was also—

Senator CONROY: Could Mr Renwick finish answering the question before you add your assistance, Mr Robinson?

Mr Robinson : Certainly.

Senator CONROY: You will get your chance to swear on the Bible, too, in a sec.

Mr Renwick : We accept the advice the company has given us. They provide us with some detail around their financials. We have no reason to query the numbers of the company has given us.

Senator CONROY: Have you—Finance or Communications—brought in any outside expertise to run the ruler over the information that you have been getting?

Mr Robinson : As is a matter of previous record, the department has engaged KPMG in the past to review corporate plans that have come to the government. So that has occurred. I think in Senate estimates last week the management of the company referred to some reviews that they had previously done. Of course, the government has asked NBN Co. to do a strategic review of both where we—

Senator CONROY: I am not talking about going forward. I just want to ascertain what has happened in the past, at the moment.

Mr Robinson : I think the strategic review is important because it does have a 'what is the current status of the roll out' element to it. That includes the costs to—

Senator CONROY: But you already know the cost. You actually have the evidence of what the costs have been and are.

Mr Robinson : Yes. We have been provided with material in the past, including that which was released at the joint committee that you referred to.

Senator CONROY: To be fair, as I said, they were considered to be estimates, not actuals.

Mr Robinson : Yes.

Senator CONROY: But last week, six months later, they were actuals rather than estimates.

Mr Robinson : Yes. I was just looking at the transcript. I agree that, as I recall, the CFO said that the numbers were still in the ballpark but they had had some increase. As it currently stands that is the information the department has available.

Senator CONROY: So the numbers I read out—$2,500 and $2,600—are the numbers with the increase. There is no increase on top of the numbers I have just read out?

Mr Robinson : I was just looking at the transcript; we might be able to find it.

Senator CONROY: That is what I am just trying to ascertain.

Mr Robinson : Those numbers provided in Senate estimates are consistent with the latest material the department has seen. But there is a strategic review happening, and that is looking at the costs incurred to date and, for that matter, going forward.

Senator CONROY: Thanks for telling me again about what is happening in the future. We will get to the future, I promise you, but I just want to ascertain and confirm that there have been weekly between the Department of Finance and the CFO; there have been pretty regular meetings between Communications, the CFO and other management; and the information that has been provided to you is consistent with what is on the public record. On top of that, KPMG have been brought in; is that a joint one or that through Communications?

Mr Robinson : They were engaged by the department, but it was for the purposes of briefing the government. Essentially, that means both shareholders, yes.

Senator CONROY: Any that Finance have brought in, Mr Renwick?

Mr Robinson : Not that I am aware of.

Senator CONROY: Separate from them?

Mr Renwick : Not separate to that.

Senator CONROY: The annual report was tabled recently. Has that gone through an Auditor-General's look?

Mr Robinson : Yes.

Senator CONROY: And been signed off as a true and fair statement?

Mr Robinson : Yes.

Senator CONROY: Mr Renwick, you have the case file going back four years. In the six weeks you have been there and in the case files is there any evidence or suggestion that the information that has been supplied publicly is not accurate?

Mr Renwick : Not that I have seen.

Senator CONROY: Has NBN Co. been doing any work on identifying cost savings in its constructions? Have you seen any estimates of costs? Like any organisation, any infrastructure project, they get smarter; they learn. Have you seen any information about proposed cost savings to the capex at this stage?

Mr Renwick : Not that I recall.

Senator CONROY: Mr Heazlett?

Mr Heazlett : I have seen references at a high level that there are claims that they put off final savings—

Senator CONROY: What is a 'claim'?

Mr Heazlett : I have seen a report that—

Senator CONROY: Who wrote that report?

Mr Heazlett : I think I have seen it in the media.

Senator CONROY: No, I have seen the exact opposite. So I am asking you—

Mr Heazlett : I would have to take it on notice where I saw it.

Senator CONROY: When you say 'report', you are referring to a media report, not—

Mr Heazlett : Not a specific—

Senator CONROY: I am surprised. A weekly meeting with NBN Co's CFO, regular meetings, and they have not told you of any work they are doing on cost savings at all? Help me here. That does not seem to make any sense at all.

Mr Robinson : I am sorry, I really do not mean to say the same thing, but there is a lot of work happening at the company at the moment on what is the actual cost to build currently and what cost savings are—

Senator CONROY: Sorry, I am very confused by what is the actual cost. They already know what the actual cost is. The costs have been stated publicly, unless you are telling us differently.

Mr Robinson : Those costs are being reviewed.

Senator CONROY: They have been reviewed by KPMG, the Auditor-General, a weekly meeting with the CFO by the Department of Finance and regular meetings with the Department of Communications.

Mr Robinson : And they are being reviewed again.

CHAIR: Mr Robinson, if I could just clarify something: already this morning we have heard evidence that the costs are accurate and that they have been reflected in annual reports and other documentation, including previous evidence at other committees. You have now introduced the spectre that the analysis of those costs being conducted may indicate that they are not accurate. Can you clarify what you are trying to say, please?

Mr Robinson : Thanks, Senator. I think it is all consistent. NBN Co. has provided material about cost per premise, including material they provided at the joint committee early in the year, and they have provided material to the government and the previous government. We do not currently have any information that questions that material. When you point at material—

Senator CONROY: You are having weekly meetings, Mr Renwick. You have got to know if there is any cloud over these figures, even though you have only been there six weeks. You are having a weekly meeting with the CFO of NBN Co. You must know if there is a question mark. Is there a question mark over these figures?

Mr Robinson : I think—

Senator CONROY: Stop answering and intervening when I am asking a question of Mr Renwick, Mr Robinson. You are not in the weekly meetings, on your own evidence. So, Mr Renwick, you have been there six weeks; you have got the files. Is there any evidence at all? Are you in any way—

Mr Renwick : The company has not raised any issues around their projections in those sorts of meetings.

Senator CONROY: I thought the job at a meeting was for you to raise questions, not for you to just sit there with them coming in, giving you a piece of paper and saying, 'Thanks, see you later.'

Mr Renwick : We ask the questions, we discuss the numbers with them and they have not provided any evidence in those discussions.

Senator CONROY: And you have not found anything where you think the information you are being supplied is not accurate?

Mr Renwick : No, Senator.

Senator CONROY: Sorry, Mr Robinson, did you want to add anything now?

Mr Robinson : I think if the Auditor-General were here, they would not say that signing off the whole global accounts of NBN Co. is a certification in relation to cost per premise numbers, but I was—

Senator CONROY: I was not trying to suggest that. Do they say, 'Here's a piece of paper with some numbers on it'? I have met the Auditor-General and I have met the officers. They are a little more rigorous than that, surely.

Mr Robinson : They are very rigorous. As I said, we have got the same information about cost per premise—essentially the same information that is being put to—

Senator CONROY: I am just asking if there is any new information. There is the public record and now I am asking you both: is there any new information that you are aware of—

Mr Robinson : As it currently stands, Senator, no—

Senator CONROY: As it currently stands?

Mr Robinson : But there is a considerable amount of work happening in the company in relation to the strategic review. The terms—

Senator CONROY: The cost per premise is the cost per premise. There are invoices. There are contracts that are signed.

Mr Robinson : The terms of reference do—

Senator CONROY: Stop hiding behind a study and terms of reference. I am asking you for facts, and the facts are there are signed contracts—back in April they were considered to be reasonable but estimates. Six months later there is even an acknowledgement—I think you made the point—that the figures are about $100 higher than the rough estimate back then. So they are not estimates in the same way they were six months ago—by definition there is six months more data, and I am not familiar with it, which is why I am asking. Just because someone else is going doing the review, does not alter the information that you have. I am entitled to ask you about that, and you are expected to answer.

Mr Robinson : I think I have answered your question, Senator, but if I have not—

Senator CONROY: No, you keep trying to smother it over, suggesting that there is an investigation that might uncover something else, which I frankly would be shocked by, because you guys have been having weekly meetings with them.

Mr Robinson : I think I have answered your question, but if I have not please ask again.

Senator CONROY: Back to the question we started at—and Mr Heazlett indicated he was aware of a media report. I know that—

Mr Heazlett : I have seen references—

Senator CONROY: I am now back to asking you: are you aware of any cost-saving proposals that are being discussed pre the review—so I do not want to hear about a review looking at all of these things—by NBN Co? Sorry, Mr Renwick, and apologies, you have only been here six weeks but they were investigating them? You asked them to.

Mr Robinson : You have asked us about any cost-savings proposals that may have been considered prior to the review. Prior to the review essentially means prior to the change in government.

Senator CONROY: No, that is an incorrect statement of fact, Mr Robinson. The review was only launched a period after the election.

Mr Robinson : NBN Co in the three weeks or thereabouts—

Senator CONROY: The review wasn't put in place that quickly, because he has already put the date back. The sixty days review has already been pushed back.

Mr Robinson : The review started on 3 October, Senator.

Senator CONROY: So are you aware of any work, Mr Renwick, that was being done by NBN Co to identify cap ex cost savings into the build of the network. This applies by definition accompanying cost savings identified for the fibre-to-the-node network. We do not have any costs to save against yet, so I am talking specifically about the fibre-to-the-home component, accepting the review is looking at where they go. Are any of you at the table—I can go through you individually, if you want. Mr Renwick is having the more regular meetings, which is why I am focused on him. Are any cost savings being looked at and investigated by the company in the fibre-to-the-home side of the model?

Mr Renwick : The focus since I have been in the position has really been at the review looking forward, so—

Senator CONROY: You have an officer who has been there longer than you have. You might want to—

Mr Renwick : From my point of view—

Senator CONROY: you might bring him to the table to give you some assistance.

Mr Renwick : I can ask the officer—he has confirmed that he is not aware.

Mr Robinson : Your question, Senator, is: has the company considered any cost savings in relation to fibre-to-the-premise deployment? I am sure they have, and they should be.

Senator CONROY: Yes, I agree with you. I am just trying to find out where it is up to.

Mr Robinson : It is probably best directed to the company. As we have discussed, we have the interactions with the company and they have consistently been looking at their contracting model and trying to improve that.

Senator CONROY: So you are not aware of board paper that may have been prepared?

Mr Robinson : We do not see board papers. We are, of course, aware of proposals that come to the government but under all the conventions of these committees we are not allowed to talk—

Senator CONROY: I am not asking for advice to the government; I am asking you if you are aware of internal work by NBN Co. around cost savings. I am just quite surprised that, with such regular meetings on such a vital issue, nobody seems to be aware that there has been any work in this area.

Mr Robinson : We are aware that they are constantly working on that. We are probably not across all the detail of that but you can direct those questions to NBN Co.

Senator CONROY: I am asking you because you have an oversight role and I would expect that oversight role to include asking about whether there are any cost savings. A weekly meeting with the CFO would seem to be an ideal place.

I am genuinely not being critical, Renwick. You have been there six weeks and you have a major shift in policy design and all that sort of thing to work on. So it might not have been top of your mind in those first six weeks. Certainly, I am surprised that other officers are completely unaware of the work of NBN Co. in a cost saving cycle. Finance is famous for helping everybody with their cost-saving proposals. I have seen many proposals from Finance to save costs at NBN Co. so I am surprised that no-one in Finance seems to know anything about any cost savings proposed at NBN Co. I am sure I will be revisiting that when you have been able to get more information.

Are you aware of any evidence at all that the cost per premise of rolling out the fibre network is materially higher than the figures we talked about that Mr Payne revealed last week between $2,500 and $2,600. I use the word 'materially'; I think you would understand the definition of that, although everybody listening may not. I was wondering if you could assist me.

Mr Robinson : I think our answer here is the same as we have provided—that is, the material on cost per premise that we have available to us is consistent with what Mr Payne provided last week.

Senator CONROY: That is not what I asked. Keep going; you may have been coming to the answer of the question that I asked.

Mr Robinson : You asked whether we were aware that it was materially higher than that. As I said, the information we have is consistent with what was said last week. These matters are currently under review.

Senator CONROY: The facts are not under review. The policy is under review. Let us be very clear: facts do not change just because you hire three new consultants. I am asking you about this again, as the oversight departments who have weekly meetings with the CFO, or regular, ongoing meetings, about this. I am not sure how often those meetings are. If you tell me that they are every two weeks than I will defer to you. They may be weekly meetings or two-weekly meetings but you have constant oversight on a weekly basis of this organisation. Are you aware of any material or evidence that would support the claim that the cost per premise of rolling out the fibre network is materially higher than the figure Mr Payne publicly revealed last week? It is a very simple question.

Mr Robinson : I think I have answered the question.

Senator CONROY: No, you have talked a lot. Would you like me to ask the question again? Perhaps we can stay precisely on the question rather than answering questions I have not asked.

Mr Robinson : Okay.

Senator CONROY: Are you aware of any evidence from your weekly meetings—your regular oversight meetings—to support a claim that the cost per premise of rolling out the fibre network is materially higher than the $2,500 to $2,600 that Mr Payne explained last week?

Mr Robinson : The current information we have is consistent with the material that was provided in Senate estimates last week.

Senator CONROY: What is your degree of confidence—fraud aside? Mr Renwick, you have been in there for six weeks, unfortunately. Do they strike you as nefarious characters?

Mr Renwick : No, Senator.

Senator CONROY: Apologies, Mr Heazlett. You have been dealing with this in an ongoing manner for how many years?

Mr Heazlett : I have been working on this in the Department of Communications for five-and-a-bit years now.

Senator CONROY: So, almost from the beginning?

Mr Heazlett : I suppose I have been, including my time in the Department of Finance, involved in this from the beginning of the RFP process.

Senator CONROY: So we know who to blame, now!

Mr Heazlett : Not as long as my colleague Mr Mason.

Senator CONROY: Okay, I think we have laboured that point sufficiently. Mr Renwick, when you do your assessments—and, again, you were not there to have done these in the past—you must be aware that you have to make assessments about the robustness of the figures. You can allocate BMG. You can talk to the company directly. You have to form your own assessments of the validity of some of the assumptions that NBN Co. put to you. Is that fair?

Mr Renwick : Yes.

Senator CONROY: In the wake of the Telstra definitive agreements, the Optus HFC agreements and the introduction of the level-playing-field rules, what threats to take-up exist in the current NBN policy framework?

Mr Renwick : I would have to take that one on notice.

Senator CONROY: Mr Heazlett, what would there be? You have speculated widely and publicly. Fortunately aeroplanes tend to not be a threat to truck hubs. A motorbike, for instance, might be a threat to a truck hub. They are probably a small threat, and a cyclist an even smaller one. Mr Heazlett, are you able to help Mr Renwick here or would you like to invite other officers to come to the table? I can continue to ask Mr Renwick some of the questions about the assumptions, but I do want Finance's view on the record today and not just, 'We will take it on notice.' If you have officers present here who are familiar with these arguments you may want to get ready to call them.

Mr Heazlett : The issues that have been identified as a threat are the number of premises that rely solely on wireless devices and do not take a fixed line service anymore and the rate at which data utilisation—in other words, the amount of dedicated capacity that RSPs acquire—increases.

Senator CONROY: So it is the CVC charge?

Mr Heazlett : The CVC charge, yes. Those are the two main ones.

Senator CONROY: Are you familiar with NBN Co.'s evidence about the consumption of data on its network?

Mr Heazlett : I have heard their evidence. I think I have been in attendance at nearly all their hearings. But the specifics of it I would have to look at.

Senator CONROY: I am sure I can find it for you to help in a minute. Mr Renwick, you are probably delving in and out of a slightly new area for you. I do appreciate that, having had to learn this all myself. It is horrible. Are you familiar with the sort of arguments we are talking about now? I promise I will not hold you to anything significant or material in your answers in this area. So NBN Co. have indicated that data issues were probably a little bit higher than they anticipated?

Mr Heazlett : The utilisation and the level of CVC capacity being applied was higher than their initial estimate.

Senator CONROY: On my sabbatical I did occasionally follow the press. I assure you that it was very occasionally! I did note that iiNet recently had their annual general meeting.

Mr Heazlett : Yes.

Senator CONROY: They also opined about the level of data usage by their NBN customers. Are you familiar with the article about that? I am sure you are vaguely aware of it.

Mr Heazlett : I think a fair description would be 'vaguely aware'. I skimmed a reference to it.

Senator CONROY: From your vague recollection, without holding you to an answer, did it seem to support NBN Co.'s data usage figures?

Mr Heazlett : It indicates that iiNet's customers on the NBN certainly have high data usage, perhaps higher than others, I think.

Senator CONROY: Regarding my reference—I am sure we will be able to track down the article at some point during the course of the morning—they opined that at first they thought it was just a blip, that it was just the early adopters and they were having a bit of a fling for the first time, and a bit of excitement. But they have come to the conclusion that it was actually a permanent shift.

Mr Heazlett : I think that is certainly the case for iiNet customers.

Senator CONROY: Which would tend to support the NBN observation that they were seeing more sustained usage?

Mr Heazlett : Yes, although—

Senator CONROY: I am not trying to verbal you. I am happy for you to come back—

Mr Heazlett : I am conscious that there are some other trends, that there has been a larger take-up in subsequent—

Senator CONROY: I am not talking about speed tiers. I am talking about data usage.

Mr Heazlett : But typically the lower speed tiers use less data.

Senator CONROY: Yes. NBN have always made the point you should not jump to conclusions about the early speed usages. A lot of people have jumped to conclusions. My next question is more speculative, so I am not holding you to it. How would you define 70,000 or 80,000 users on fibre nodes—is that what it is now? I know it is over 100,000 in the combined—

Mr Heazlett : Yes, I think it is somewhere in that—

Senator CONROY: Maybe 70,000. We will come to a more forensic examination in the discussion on these later. The usage across a sample that is broader than a small sample—70,000 is not a small sample any more. Kiama is not a town of 'uber-geeks', that I am aware of. Are you familiar with Kiama?

Mr Heazlett : I have been there.

Senator CONROY: It is not yet known as the Silicon Valley of Australia, though, is it?

Mr Heazlett : No, although they seem quite keen there.

Senator CONROY: I agree that they seem quite keen. The take-up rate there is quite staggering. I will follow this up if I get a chance to ask NBN any questions. One of the things I noted that is no longer being referred to at all is the take-up rates. I will be pursuing that with NBN Co. But last time I checked I think for Kiama—between pending and those actually using it, where pending is the people who have made an order—the take-up rate was over 70 per cent.

Mr Heazlett : I have not looked for the last two weeks, but it was certainly well into the 60s.

Senator CONROY: It was in the high 60s for actual connections. When you add in orders, it was past 70 per cent. That is my vague recollection, but I have not seen the statistics for a long time, as you would understand. Would you say that suggests that everybody in Kiama is an early adopter?

Mr Heazlett : It would indicate that there has been a strong take-up of the service, and that Kiama has moved their fixed line services across quite quickly to the NBN.

Senator CONROY: Different companies have different profiles, but iiNet certainly would indicate that they thought their amount of data usage had moved up, and it was not a blip. It was something more substantive than that. Coming back to the assumptions in the current corporate plan, I think the assumption was that the take-up rate across the country would be about 74 per cent?

Mr Heazlett : Yes.

Senator CONROY: And the remaining 26 per cent was made up of wireless-only homes?

Mr Heazlett : And vacant premises.

Senator CONROY: And despite a lot of commentary, because of the way I think the ABS records its statistics, naked DSL is sometimes inaccurately described as a wireless-only home in some classifications.

Mr Heazlett : I must admit I have not gone into that issue.

Senator CONROY: There is some argument that the figures show that wireless-only homes are about 13 per cent, or 11 or 12 per cent now. But that actually incorporates a naked DSL, which, last time I checked, included a fixed component.

Mr Heazlett : Yes, I can understand that.

Senator CONROY: So, a truer reflection of wireless-only homes is about eight per cent or nine per cent. And again, I am a little out of the loop; I am happy if you are able to have anyone track that down.

Mr Heazlett : I have not seen any recent figures on it.

Senator CONROY: Is wireless broadband a substitute for fibre to the premises? Or is the technology complementary?

Mr Heazlett : Wireless broadband, depending on the nature and the proximity to the service, and depending on your broadband demands, could be a replacement for some people. If you want a dedicated high-throughput service, then wireless would not be that substitute for fixed-line broadband.

Senator CONROY: No—I said fibre to the premises. I am not going to let you get away with that! So, in terms of wireless broadband—and I am afraid Finance does have to answer a question, not on notice, in a minute, Mr Renwick—in terms of fibre to the node, which delivers 'less throughput' than a piece of fibre all the way to the home, I am just trying to remember, you were talking about—

Mr Heazlett : Dedicated—

Senator CONROY: You were cheeky and you used the word 'fixed' rather than 'fibre to the premises', so I am now returning the favour here! The question is: is a wireless network more or less of a complement or a substitute for a fibre-to-the node alternate fixed line?

Mr Heazlett : Once again, it depends on the requirements of the user.

Senator CONROY: When you work out financial models, you do not sit there and say, 'What does every individual user want?' You make an assumption about substitutability.

Mr Heazlett : For example, if you were a user who wanted a 12/1 service, then potentially wireless could be a substitute for that, depending on the nature of the service and whether you wanted—

Senator CONROY: But that is exactly the same for when you make a calculation in the macro in a financial plan; you make a calculation across the entire consumer base, not targeting, as you just tried to do, one individual segment of the consumer base. So the issue I am asking about is: is there a greater degree of substitutability? Or is your proposition that the substitutability is exactly the same between fixed-line networks and a wireless network? And I mean for the purposes of a financial model, not your actual opinion of an individual user.

Mr Heazlett : I think the NBN corporate plan model—

Senator CONROY: And this is defined as a financial risk to an infrastructure project—is it quantified for fibre to the premises? By definition, you have to have a judgement. If NBN Co. comes to you and said it is 100 per cent the same, you have to make a judgement. So, I am now asking you: is it reasonable to say that the risk is the same?

Mr Robinson : Can I clarify the question. Do you mean the same as previously?

Senator CONROY: The same as the current forecast based on fibre to the premise. There is an assumption, and everyone has looked at these assumptions and robustly tested them, they have been criticised for being too optimistic. What I am asking you now is to make your own judgement based on evidence and expertise that you will bring to the table. Would you say that the substitutability of wireless to fibre to the premise is the same as for fibre to the node?

Mr Robinson : I think we have to take that on notice.

Senator CONROY: I do not think you have to take that on notice at all, Mr Robinson. I think you know the answer.

Mr Robinson : I would have to take it on notice.

Senator CONROY: So if I came to you and said they are exactly the same, you would accept that.

Mr Robinson : No, I would have to take it on notice. We would have to think about what the issues are and perhaps consult with colleagues et cetera.

Senator CONROY: Which part of it would you have to think about?

Mr Robinson : It is a complicated question and, as I said, I just do not feel like we should provide an answer at the moment. So we will take it on notice.

Senator CONROY: I am going to be unkind here. I do not really care about your feelings, I care about you giving accurate information in evidence to the committee. This is not something that is a new subject. You might want to say, 'I would like to get a considered opinion,' but not 'I do not feel like answering at the moment.'

Mr Robinson : It is because we want to provide the most accurate answer we can. That is why I would like to take it on notice.

Senator CONROY: And who are you going to call, who do you need to consult before you can come up with that answer?

Mr Robinson : Colleagues in the department.

Senator CONROY: Mr Mason, do you want to come forward and help?

Mr Robinson : We have taken the question on notice, Senator.

Senator CONROY: I am just asking who you are going to consult. Is Mr Mason one of them?

Mr Robinson : We have taken the question on notice.

Senator CONROY: I have asked you a separate question. I have asked you who you are going to consult.

Mr Robinson : We will consult with colleagues in the department and try and get the best—

Senator CONROY: Can you name them, please?

Mr Robinson : I cannot name them at the moment. It will depend on—we will have to consider what the issues are.

Senator CONROY: Mr Heazlett, who would you want to consult?

Mr Robinson : We have taken the question on notice.

Senator CONROY: No, I have asked you a different question.

Mr Robinson : You have asked a complicated question and it is not—

Senator CONROY: No, I have now asked you a follow-up question. I have accepted that you have taken it on notice; I have now moved on to who you are going to consult inside the department. Can you tell me, please?

Mr Robinson : We will consult our officers in the department.

Senator CONROY: I am asking you which officers. It is not a secret.

Mr Heazlett : It is an issue that you would want to work through with a range of officers and do a reasonably detailed—

Senator CONROY: I am not disagreeing with you. I am asking you to name the officers.

Mr Heazlett : We would consult, for example, our technical advisory unit people.

Senator CONROY: How many people in that unit?

Mr Heazlett : Five of them.

Senator CONROY: Who are they?

Mr Robinson : We really cannot list the names of everyone in our—

Senator CONROY: You do not know your technical advisory unit? Do you consult them often?

Mr Robinson : We do consult people. We consult a range of people. You have actually asked a difficult question and we will have to have a look at whether there are any other international examples and what previous work has been done on NBN Co. I would like to make sure we do that before—

Senator CONROY: Nobody has done a substitutability question against fibre to the node because nobody is doing that in Australia. So my question is this: based on all the evidence you had, Finance made a judgement about the robustness. KPMG, Ernst and Young and Greenhill Caliburn all made judgements about the substitutability of wireless for fibre to the premise, and they were all criticised for being far too optimistic. So I am asking you would the same assumption be plugged in. You said you want to take it on notice.

Mr Robinson : Yes, Senator.

Senator CONROY: I am asking you who you are going to consult when you take it on notice.

Mr Robinson : We will consult with colleagues in the department. I certainly cannot list them all at the moment but, as I have said, you have asked a difficult question and we do not feel like we can necessarily provide you with a fully accurate answer at the moment so we will take it on notice.

Senator CONROY: I know it is not your document, but it is the government's policy document and you are expected to implement and interpret the government policy document—is that right? You have to look at it, read it, make assumptions and seek to implement it.

Mr Robinson : Yes.

Senator CONROY: Claims that infrastructure based competition will be reintroduced in HFC areas—I am not misquoting that, am I?

Mr Robinson : I do not have a copy in front of me, but—

Senator CONROY: It is relatively well known. I am not trying to verbal you.

Mr Robinson : I am happy for you to quote from it and I am not trying to dispute it, but we do not have the precise words in front of us.

Senator CONROY: And I understand that the regulatory structure, including competition, is part of a separate review.

Mr Robinson : That is right.

Senator CONROY: Who is doing that review?

Mr Robinson : The government is still considering the arrangements for establishing that review and has not made an announcement.

Senator CONROY: Is it an NBN organised review or a department organised review? I am genuinely seeking information.

Mr Robinson : We expect it will be organised from the department, but the government is still considering the arrangements.

Senator CONROY: I just want to know whether it was an NBN organised thing or it was you guys. Is it both departments or just one department?

Mr Robinson : It will be done from the task force, which is in the Department of Communications, but it has linkages to other departments.

Senator CONROY: Some lucky person from Finance—okay. Who is familiar with the footprint of the HFC network?

Mr Robinson : We have information on the footprint of the HFC, yes.

Mr Heazlett : Broadly.

Mr Robinson : And it is broad, yes.

Senator CONROY: Does it run past my house?

Mr Robinson : I do not know where you live.

Mr Heazlett : That is a detail in Melbourne I am not familiar with.

Senator CONROY: Let's keep it that way—I think that is safest! But you are roughly aware of its footprint?

Mr Heazlett : I am not sure whether it runs into Williamstown or not.

Mr Robinson : Yes, we are.

Senator CONROY: To come back to the iiNet article of 18 October, it is headed: 'iiNet's NBN fibre customers use 60 percent more internet'. The article states:

ISP iiNet says its NBN fibre customers have set a 'new norm' in internet usage that is 60 percent higher than its ADSL or Naked DSL customers.

…   …   …

'Initially we did think particularly on the download piece that it might be a bit of a blip, that customers were getting a lot faster speeds so they were initially using the service a lot more,' McIntyre said at iiNet's annual open day late yesterday.

'We're talking in the region of 60 percent higher download and upload usage than we're seeing on customers' ADSL and Naked plans, and it hasn't been a blip—

they make that point: it has not been a blip—

it's effectively the new norm.'

We have basically seen that. Do you have a rough geographic understanding of the footprint?

Mr Robinson : Yes.

Senator CONROY: Do you have any demographic understanding of the footprint?

Mr Robinson : Yes. We could put that material together; we have access to it.

Senator CONROY: I have just read criticism regularly that it is only in certain areas and only rolled out and targeted for certain areas. Are you familiar with that?

Mr Heazlett : It is ascribed that it is in higher income areas, but I am aware that there are some areas that you might describe as low income.

Senator CONROY: But of the 2.3 million homes?

Mr Heazlett : They are all in metropolitan areas. To the extent that, for example, metropolitan areas may have a higher demographic spread than regional areas—

Senator CONROY: Is it in Toorak in Melbourne?

Mr Heazlett : I think so, yes.

Senator CONROY: I think it is. And it is not in Broadmeadows in Melbourne. Trust me.

Mr Heazlett : I would have to check on that. I am just trying to recall where I have seen the boundary. Broadmeadows tends to be more an industrial area.

Senator CONROY: You are aware of the assessment that it is in more high-value areas than not high-value areas, if I could describe it that way. In other words, it is not a 51-49 proposition.

Mr Heazlett : But it is in Blacktown, for example.

Senator CONROY: I am very familiar with it in Blacktown. Optus tried to sell it to me once, but it did not deliver more than 60 or 70 meg when they last tried to sell it to me, which was a few years ago. They may have tweaked it by now. Given the description that has been used, customers in the general footprint will be described as high-value customers?

Mr Heazlett : Yes.

Senator CONROY: So, if NBN Co. faced competition from Telstra and/or Optus with their HFC in these areas, would there be a revenue impact on the current corporate plan?

Mr Robinson : Essentially, yes. Competition will have a revenue impact, yes.

Senator CONROY: Downwards. Just to be clear, it is not going to go up.

Mr Robinson : Yes.

Mr Heazlett : I am going to—

Senator CONROY: There is no qualification, Mr Heazlett.

Mr Heazlett : No, I was just going to—

Senator CONROY: It is relatively unambiguous. Even Finance will back us up on this one.

Mr Heazlett : But the announcement of the Optus deal, for example, indicated that there was an improvement in the NBN IRR as a result of that.

Senator CONROY: Yes, so the IRR—the revenues for NBN Co.—would be impacted negatively if there were infrastructure competition in these areas.

Mr Robinson : Yes. The extent to which it occurs may well vary, but yes.

Senator CONROY: Okay. So, if NBN Co. does not roll out in HFC areas or delays rolling out in these areas with fibre to the premise, as per the current corporate plan, the revenue assumptions would have to be revised downwards.

Mr Robinson : If NBN Co. adjusts its rollout program, including timing and locations, there would have to be an adjustment to both the cost and the revenues of that, yes.

Senator CONROY: But the revenues would be revised downwards.

Mr Robinson : Is that in your example, where they delay rolling out to HFC areas?

Senator CONROY: That is the stated policy of the government.

Mr Robinson : It would depend on—

Senator CONROY: We could read that as competition in areas. Now we are talking about whether or not they actually deploy into these areas, as I have said, which is after 2016. So, by definition, the number of potential connections is less. I think we established that fewer connections equals less revenue a little earlier in our discussions.

Mr Robinson : Yes, but I think it also depends on where they are rolling out to. If they are not rolling out to a particular area—

Senator CONROY: But we have agreed that HFC areas, without being 100 per cent definitive, are high-value customer areas. If the decision is taken that for the next three years we do not roll out any network into HFC areas, which is the stated government policy, then the revenue implications for NBN, by definition, are that there are going to be fewer customers in that footprint. Fewer customers means less revenue. Help me, Mr Renwick.

Mr Robinson : I would say probably, but—

Senator CONROY: Probably? Communications seem to be struggling with the concept that they agreed with earlier in the day, which was that fewer customers equals less revenue. So now we have identified an area that the government policy specifically says we will not roll out to at the moment. That is a stated government policy, Mr Robinson. Do you agree?

Mr Robinson : Yes.

Senator CONROY: Therefore there cannot be the same number of connections to the National Broadband Network in those high-value areas, by definition.

Mr Robinson : Yes, in the high-value areas, if that is what occurs.

Senator CONROY: That is the government's stated policy.

Mr Robinson : Yes, but I just make the point that the overall revenue impact depends on where they are rolling out to as an alternative to those areas, and the overall impact on the business plan will depend on both the changes in capital costs and revenue.

Senator CONROY: Are there equivalent high-value areas outside the HFC footprint that you can identify for me to try to suggest that the rollout into these areas would be the same, Mr Robinson?

Mr Robinson : Sorry, can you repeat the question.

Senator CONROY: I was asking you, given your heroic attempt to answer the question, whether you could identify which alternative high-value areas outside metropolitan Australia would be of equivalent revenue value to the National Broadband Network. What you are attempting to do is say that, if they rolled out somewhere else, they could get the same level of customers and revenue. So I am inviting you to nominate the high-value geographic areas that would be an alternate to all of metropolitan Sydney, Melbourne, Brisbane—I do not think it is in Perth and I do not think it is in Adelaide—and up and down a bit of the north coast and south coast of Sydney. Would you like to keep going with your answer? If you are suggesting that an alternate customer base can be acquired by NBN Co. to offset a high-value customer base that you are not going to, where is it?

Mr Robinson : I was just making the point that the overall impact on revenue would need to take into account the revenue from where you are rolling out to as an alternative—

Senator CONROY: I am inviting you to back up your suggestion, where you can nominate an equivalent high-value area that the NBN would be rolled out to.

Mr Heazlett : I do not think we could point to a broadband constrained area such as Gungahlin in the ACT, where there is high take-up and high-value customers.

Senator CONROY: I think that is an excellent example, but I need you to substitute 2.3 million homes of high value.

Mr Heazlett : There are also other areas of broadband constraint which may potentially be of high value.

Senator CONROY: We will get to your broadband constrained assessments soon and we will be returning to Williamstown. I probably have just one more question in this area and then someone else might want to keep going. Are we defining broadband constrained areas on a demographic basis or are we defining them on an infrastructure basis? What is the assessment? NBN Co.'s assessment might be different to yours. You are not looking for high-value areas that are broadband constrained; you are just looking at general broadband constrained areas, Mr Robinson?

Mr Robinson : Yes, we are. This is the work on broadband quality et cetera that the department is doing.

Senator CONROY: Which officers will be answering questions specifically on that later for me?

Mr Robinson : Mr Heazlett and I can answer questions on that.

Senator CONROY: I am always impressed by your knowledge, Mr Robinson and Mr Heazlett, but I am sure even you are not going to be up to tell me whether Williamstown—I will expect the officers who are doing the survey to be at the table, just so you are clear and if you need to round them up from the department in the next half-hour. I will expect them at the table. I want to discuss at length their methodology. I do not for a moment want to suggest that you are not fully across it, but I will be asking some fairly detailed questions. I am just giving you at least half an hour's notice that the individuals in that unit will be expected at the table.

Mr Robinson : As I said, Mr Heazlett and I can answer questions about this . We are absolutely across where that work is at. It is ongoing work and we are hoping to come to a landing on it in the coming weeks. Once it is available—

Senator CONROY: I am not interested in the result; I want to know about the methodology, I want to know about—

CHAIR: Where they get their data.

Senator CONROY: Yes. So we will have a lengthy conversation about how they are actually doing their job, not what the outcome of their job is. I can finish there. Perhaps Senator Ludlam or Senator Lundy would like to have a go for a little while.

CHAIR: Just to take broadband constraint a little bit further, perhaps you could start by telling the committee what your understanding is about the definition of broadband constrained areas.

Mr Robinson : The project we have underway is implementing the government's commitment about producing a report about broadband quality and availability. We have gone to all the infrastructure providers and sought information from them. Of course, the big ones are particularly important.

CHAIR: Who are they?

Mr Robinson : The big ones being Telstra, Optus and iiNet. That would be largely it. There are small providers and we have, in fact, made inquiries of all of them. We have received information and we are currently analysing it with a view to producing a report in the coming weeks.

CHAIR: When was the request first made to those three companies?

Mr Robinson : I would have to take the precise dates on notice, but we did make requests during October to all of them.

CHAIR: And what did you ask for?

Mr Robinson : I am advised that we wrote to carriers on 15 October and asked for information by 31 October. As I said, there was a range of them: Telstra, Optus, NBN Co., Vodafone, iiNet, et cetera, going down to some really small ones. We asked for information about the infrastructure and where it is located—the type of infrastructure that there is—and the footprints of where they provide usage and, depending on the provider, the data usage.

CHAIR: Sorry? Say that last bit again.

Mr Robinson : Depending on the carrier that we went to, the data usage—

CHAIR: Of all of their services—

Mr Robinson : Yes.

CHAIR: or all of the products that they provide?

Mr Robinson : Not all of the products but all the services, yes.

CHAIR: I do not want to cross over where Senator Conroy's questions will go, but we will be wanting the specifics about the nature of the request and specifically: what infrastructure, for example; the location; and technology availability within exchanges; was that part of the question?

Mr Robinson : Yes, it was.

CHAIR: I could sit here and go through a long list of different types of infrastructure and you could say yes or no, or you could get the people who have that information and sit there and tell us the whole list of the types of infrastructure that you request. How would you like to do it?

Mr Robinson : We can take it on notice and provide you—

CHAIR: I do not want it on notice. I think Senator Conroy has made it clear that we would like the information today.

Mr Robinson : We can provide the information we requested, an indication of the information we have received, and of course when the report is available it will show how we have used it, and that will be open for discussion and questioning et cetera, as it should be.

CHAIR: So, by some miracle of miracles, have you got the data to show where every pair-gain system, small, medium and large, exists in Australia—because no-one else has been able to get that.

Mr Robinson : I will come back to you with an answer on that. I just have to take that on notice. We have asked for the information on pair-gain availability—

CHAIR: Hang on. With due respect, Senator Conroy has asked you to bring the people to the table who are doing this survey. I have specific questions about the infrastructure that you have just told me you have all the information on, and now you are wanting to take it on notice. That is not good enough. We have an opportunity to do it today.

Mr Robinson : You are asking us about a project that is underway, is still looking at information and has not come to a conclusion.

CHAIR: Yes. I am not asking for the conclusion; I am asking about what data you have received. You have told me that that was received by 31 October.

Mr Robinson : Well, as I said, we will try and get you an answer to your specific question about pair gains.

CHAIR: As I said, would you like me to go through every type of technology that I am aware of, and you can say yes or no, or can you get the people at the table and they can tell us what type of technology you have requested information on?

Mr Robinson : We will see whether we can get the officials available.

CHAIR: Great.

Mr Robinson : I am not sure we can, because they are absolutely very busy on the project.

CHAIR: Sure. They have not had to be here all morning. If we could perhaps plan to get them here by 11, that would give Senator Conroy an opportunity to ask them questions.

Mr Robinson : If that is not possible we will do our best to answer the questions or make inquiries of them without them being here and try to get the answers.

CHAIR: All right. If you could make that start happening in the background, that would be very helpful. Senator Thorp?

Senator THORP: Are you aware of how many ISPs are servicing Tasmania as compared to the mainland?

Mr Heazlett : I do not have these details to hand. I would need to check with NBN Co. to find out the latest numbers of RSPs they have registered to their Tasmanian point. It varies.

Senator THORP: Can we get that information today?

Mr Heazlett : We will make the request.

Mr Robinson : We should be able to get that information, Senator. We will try. So the question was how many RSPs are active in Tasmania?

Senator THORP: Yes, compared to what is happening on the mainland.

Mr Robinson : Compared to the mainland, okay.

Senator THORP: The reason I ask that question is that my impression is that there are fewer in Tasmania than there are on the mainland, and I am wondering: why do you think that would be?

Mr Heazlett : The number of RSPs servicing any particular area is dependent on those that, effectively, provide a service at a particular point of interconnect—there is a point of interconnect in Tasmania—and usually that is determined by whether they have a localised customer base in that area, their views on whether they can attract customers in that area and their ability to access backhaul services or trunk transmission services to provide services back to that point of interconnect. The NBN only provides a service from the point of interconnect to the end-user premises.

Senator THORP: I would have liked a clear answer. My understanding is there are somewhere between 11 and 20 in Tasmania, compared to about 40 nationally. Would you agree that that means Tasmania is going to end up in a situation where we have far less competition?

Mr Heazlett : There are some 48 nationally, but not all 48 are available at all locations where the NBN provides services on the mainland. It is dependent on the presence of RSPs at individual points of interconnect. There are a number of interconnect points in Sydney. There is one in Northern New South Wales; I think it may be Armidale, but I would need to check the list again. So the numbers at various points of interconnect do vary quite widely—and I recall seeing that, somewhere, there may only be five. So, in that sense, Tasmania might actually have more competitive services than the people serviced by that point of interconnect.

Senator THORP: What impact do you think the cost of the Bass Strait backhaul has on this?

Mr Heazlett : That has been a factor, but that service is now declared and subject to ACCC scrutiny. In that sense, it is a matter for the ACCC to regulate and ensure that the pricing is at a level that reflects the ability to encourage competition.

Senator THORP: So your understanding is that the ACCC thinks that the Bass Strait backhaul rates are not too expensive?

Mr Heazlett : I am not familiar with where the ACCC's current views are, but the transmission services have been declared, and it is subject to their regulation now.

Senator THORP: I think one of your officers wants to tell you something.

Mr Heazlett : I am advised there are some higher-cost structures because of the cost of submarine cable, but the ACCC is able to regulate that.

Senator THORP: What do you consider the risk if the cable fails?

Mr Heazlett : There are, as I understand it, three cables joining Tasmania to the mainland, so there is a level redundancy provided in that.

Senator THORP: Yes, but not everyone agrees on that, as you would probably imagine. Are there any plans or, at least, early discussions about the provision of another cable?

Mr Heazlett : From time to time, I have seen discussion about additional cables for Tasmania. I am not familiar with any current plans.

Senator THORP: Would you feel more comfortable if there were more redundancy, as you say?

Mr Heazlett : It depends on the level of comfort you are seeking. For example, there is more redundancy there than there is between the West Coast and Asia, which I think only has two cables. I think there have been some discussions about joining Tasmania through to New Zealand, but I do not think they are well progressed at the moment.

Senator THORP: Do you have any level of awareness about what plans are in place in Tasmania for the stage 2 towns to make people aware of the copper disconnection deadline, or is that not in your area?

Mr Heazlett : We have an overview role jointly with NBN Co. in terms of public information on the process of the NBN Co. and the connections with fibre. I am broadly familiar with the planned dissemination of information relating to disconnections, and NBN Co. is in the process of making sure that all people have a program of advice that spans the 18-month period during which the migration process is designed to take place.

Senator THORP: Do you have any concerns that there have already been incidents whereby people have been left in limbo, disconnected from one and then not reconnected to the other?

Mr Heazlett : I have seen media reports. My understanding is that these have arisen through the cease-sale provisions, where people have changed carriers and where that carrier has been unable to implement an NBN connection and unable to access, because of cease-sale provisions, a replacement Telstra service. So it is an issue that arises through the change of RSP during this period. The disconnection otherwise would not be forced on a person until the full 18-month period had taken place.

Senator THORP: So you are taking an oversight role during this period?

Mr Heazlett : We work jointly with NBN Co. on the public information process.

Senator THORP: And you said that you have seen reports in the media. There has been no formal dialogue or conversation with NBN Co. from your side to make sure the risk to people is minimised?

Mr Heazlett : We have been engaged with NBN Co. to try to ensure that services are available—I understand this relates to what are known as service class 0 premises—to minimise the number of service class 0 premises and to ensure that the number is reduced to zero well before the end of the 18-month migration period. The issue of a person changing provider and through that process disconnecting their copper service before they have been assured of being able to get a fibre service is an issue that I think is an aberration in the process.

Senator THORP: So you do not imagine that is going to happen very often.

Mr Heazlett : It is perhaps something we need to pick up and ensure people understand that, before they disconnect their current service or change providers with that result, they can verify that they can get a service.

Senator THORP: Who do you see as responsible for that message? Yourselves?

Mr Heazlett : The NBN Co. is the party responsible for the promulgation of information.

Senator THORP: But you have an oversight to make sure they do their job properly.

Mr Heazlett : Yes.

Senator THORP: Thank you.

Senator CONROY: I appreciate you had to jog your memory a little, Mr Heazlett. Mr Renwick probably has not had a chance to get up to speed with the full product suite being offered by NBN Co. What products and traffic classes are available or to be made available under the current NBN Co. corporate plan for business customers medium and enterprise?

Mr Heazlett : Excuse me, I will have to consult the corporate plan. There will be a range of business products. My recollection is that four traffic passes will be available. Where are the products—this one has not got the products in it; I need the previous one. There are a range of dedicated business products that are under development. There is a revenue forecast but I need to check their product road map to remind myself of those.

Senator CONROY: Which corporate plan are you referring to, Mr Heazlett?

Mr Heazlett : I have the 2012-15 one in front of me at the moment but, kindly, Mr Mason, has given me the SAU, which details a range of—there is a standard business offer specified there; a range of networks from network interface offers; multicast media stream; multicast domain offers—

Senator CONROY: Can all of these products be made available to FTTN customers?

Mr Heazlett : The nature of the products to be made available to FTTN—

Senator CONROY: That is not what I asked. I asked: can all of them actually be offered?

Mr Robinson : Yet to be determined.

Senator CONROY: No, it is not. It is a laws of physics question; it is not a yet-to-be-determined question. The laws of physics were determined a few hundred years ago, so I would like a truthful answer. Yet to be determined is not a truthful answer.

Mr Robinson : In terms of what products can be and will be offered on NBN fibre-to-the-node: not yet determined.

Senator CONROY: No, I didn't ask you what the product range that was being planned to be offered; I asked a very straightforward question: is it possible to offer all of these products on fibre-to-the-node? That is different to: do they want to try? All three of you must know the answer to this question, because all three of you have to make assessments about the validity of revenue forecasts based on this information, so you can't not know this information.

Mr Robinson : Senator, we will need to know this information in going forward and looking at a new corporate plan for an NBN with new products. No decision has yet been made about what products will be offered. I take your point that some of the products in terms of their—

Senator CONROY: Hang off a gigabit: on an FTTN network and don't play with the 'if it's 100 metres from the home game,' because there is no suggestion that FTTN is going to be 100 metres from a home.

Mr Robinson : I am actually not trying to be difficult but I would probably note that some of the products under a full fibre-to-the-premise model are not available on fibre-to-the-node but there is no decision about what products will be available.

Senator CONROY: Could they offer a product that is not possible to deliver on fibre-to-the-node?

Mr Robinson : Could NBN Co under—

Senator CONROY: Could they offer a product that is actually not technically feasible to offer? Can they offer a committed information rate of 40 or 250 or 500 or 1,000 megabits, which are about to be introduced, coming off a committed information rates on FTTN? That is a very straightforward question. It might be technically for uninitiated people a seemingly complex question. It is a very simple question for someone of your experience, Mr Robinson.

Mr Robinson : I do not know the answer to your question, Senator. As I said, there are products that no doubt can be offered on fibre to the premises that cannot be offered on some fibre-to-the-node networks.

Senator CONROY: Sorry—I lost you in that last sentence.

Mr Robinson : I said that there are products that could be offered and are being offered on fibre-to-the-premises networks that probably cannot be offered on fibre to the node.

Senator CONROY: Any product that involves committed information rates?

Mr Robinson : I do not know the answer to that question.

Senator CONROY: I accept that that is a fair answer—that you may need to take it on notice and come back to me. Have you seen any information on this from, perhaps, NBN Co.? And be very careful how you answer this, Mr Robinson!

Mr Robinson : No, I have not—not that I can recall.

CHAIR: Just for the record, it might be useful if you ask that question again, Senator Conroy.

Senator CONROY: I said: have you seen any information provided to you by anybody, including NBN Co., on these issues?

Mr Robinson : And my answer is: not that I can recall. I am happy for Mr Heazlett to comment.

Senator CONROY: Mr Heazlett—you do read the information you get in the blue book, don't you?

Mr Robinson : Which blue book are you referring to?

Senator CONROY: There is only one blue book. And you should have read it as well.

Mr Heazlett : Perhaps I could just clarify exactly what information—

Senator CONROY: I am asking whether or not you have any information about whether or not you can provide committed information rates of 40 or 250 or 500 or 1,000 megs on FTTN. Mr Robinson is saying he does not know, he is not sure—and that is perfectly reasonable. And then I asked if you have had any information provided to you by anybody else. That is where I am now asking you to think very carefully about your answers.

Mr Heazlett : Certainly I would say that I think I have seen information that you cannot provide 250 or 500 committed information rates.

Senator CONROY: Mr Heazlett has seen it, but you have not, Mr Robinson?

Mr Robinson : As I said, I cannot recall. And as I said, I am quite happy for Mr Heazlett to answer.

Senator CONROY: He has.

Mr Heazlett : Forty, I would have to check.

Senator CONROY: But definitely not 250, 500 or 1,000—but you are happy to check? So, you have seen information provided by somebody, probably NBN Co.? It is not your natural area of expertise, committed information rates, except when you have to do an analysis on the revenue projections, which is exactly why you should know it, and so should Mr Robinson, and so should Mr Renwick, because it is exactly germane to a financial plan. So, if you cannot offer those products on FTTN—and I will stick to 250, 500 and 1,000—can you generate the same revenue that is in the current corporate plan, if no-one in the FTTN footprint can get those products?

Mr Heazlett : You certainly cannot for a fibre-to-the node connection, but there is the ability for a person to access—there will be some fibre available.

Senator CONROY: I am talking about what the government is providing, not if people decide to do something else themselves. So, we are talking about the government's rollout, not an individual who decides to do something else.

Mr Heazlett : In an area where only FTTN is available, they will not be able to access committed information rates at those higher levels.

Senator CONROY: Are you familiar with this evidence, Mr Renwick?

Mr Renwick : I have not seen anything on that.

Senator CONROY: You have not read the blue book?

Mr Renwick : I have not read the blue book.

Senator CONROY: That is a little surprising, frankly.

Mr Renwick : I am not sure what the blue book you are talking about is, sorry, Senator.

Senator CONROY: The blue book is the generally accepted description of the information provided to an incoming government.

Mr Renwick : I have not seen the Department of Communications blue book.

Senator CONROY: But given that both departments as joint shareholders received the same information, you should have received the same information as Mr Heazlett. Now, I appreciate that you have only been in the job six weeks, and 80 per cent of your job is probably over in the new projects, but I would invite you to make yourself familiar with the information in the Finance blue book. So, we were talking about multicasting before, Mr Heazlett. Does that require committed information rates of any particular speed, that you are aware of?

Mr Heazlett : I would have to check on that. I would have to check the nature of the multicast service that could be provided over a—

Senator CONROY: Could you explain for the beginners how a multicast service is provided?

Mr Heazlett : Once again, I would have to explain that I am not a technical person—

Senator CONROY: I am very conscious that you will be able to successfully give us a layman's description. I hesitate to invite Mr Mason to the table as a reinforcement, but I am sure you can manage it.

Mr Heazlett : My understanding is that a multicast service operates by the distribution of data, essentially, into the system to a point close to the customer so that a single stream is sent out and then it is subject to a cache close to the customer to minimise the traffic demands in the system.

Senator CONROY: So why do committed information rates matter? Where is the interaction between that product and a committed information rate—

Mr Heazlett : Multicast usually being related to broadcast video. For video quality, you want, essentially, the availability of the capacity to keep a steady stream video image available. Whether that requires fully committed information rates in the final access service I would have to check. For example—

Senator CONROY: I am sure you could check relatively quickly. You have all those experts in the department behind you, Mr Heazlett. I do not mean physically necessarily.

Mr Heazlett : The committed information rate would be available over the fibre component of the network to the node, for example.

Senator CONROY: Let's be serious. Now you are dissembling. If it is cached at a node before it transfers onto the copper, can you deliver? I think we have agreed you cannot deliver committed information rates, on your own evidence, and we are agreeing that multicasting requires a degree of committed information rates. I do not have the answer either, but it does require a degree of it. I think that 40 megs is going to struggle on fibre to the node, but you will confirm that for me later in the morning—whether 40 is included in the 250, 500 or 1,000. If NBN Co. cannot offer a range of products to FTTN customers, the revenue projections in the current corporate plan would have to be revised down, given the products that could be offered to all customers who are getting—by definition, the 93 per cent. If that is reduced, by definition, your revenue forecast is also reduced.

Mr Heazlett : There would certainly have to be a revision. The extent I cannot recall. It is a long time since I have looked through the detailed disaggregation of revenue forecasts.

Senator CONROY: But a range of products cannot be offered and therefore the revenue cannot be accrued for NBN Co. if those products are not offered to a large, large slab of its customer base?

Mr Heazlett : That is correct.

Senator CONROY: What is the latest ABC profile for 50 and 100 megs on fibre? It goes to the corporate plan, page 98. This is about people who are using it. I think that is what I am getting to.

Mr Heazlett : I must have a different version. The one I have here stops at page 96. Is it a table?

Senator CONROY: What are the take-up rates? Who has taken up what rates?

Mr Heazlett : I must admit, I have not seen a breakdown for some weeks. I am trying to recall when I last saw a breakdown on the take-up rates. My understanding is that the distribution is skewing back now towards where the corporate plan—

Senator CONROY: The original forecasts?

Mr Heazlett : Yes.

Senator CONROY: Are you able to tell us—right now or perhaps someone can quickly get it, because I do not have the latest—what the profile is?

Is it that 100 per cent of people have taken 100 meg; is it that 10 per cent of people have taken 100 meg? What I am really looking for is the percentage who have taken 50 or 100 meg plans?

Mr Heazlett : I will need to get someone to check it.

Mr Robinson : We will take it on notice. If we can get the information today, we will.

Senator CONROY: My last iteration, which was probably five or six months ago, as I have said—

Mr Heazlett : I am not sure whether I have seen anything much more recent than that.

Senator CONROY: They produce weekly figures to the department.

Mr Heazlett : The ones they provide to me do not include breakdowns by ABC take-up.

Mr Robinson : We will try and get the information if we can.

Senator CONROY: I am sure it is readily available on the email or that thingy called the internet. I am sure someone is watching who could email it to you pretty quickly. I am sure you have got a smart phone somewhere nearby that reads your emails. Mr Harris used to bring his computer to hearings. Funnily enough, I used to think you did, Mr Robinson. Is it broken?

Mr Robinson : I am hoping my colleagues behind me are making inquiries. We should be able to get it.

Senator CONROY: My recollection is that over 30 per cent take the 50 and 100. It may have come down a little bit in the last few months, but I am just seeing if we can get the latest information.

Mr Heazlett : In broad order, that is what I recall.

Senator CONROY: I did ask this before: could you confirm the start-up dates for the 250 and 500 gig plans just in terms of what is on the public record?

Mr Heazlett : We are still having difficulty finding that.

Senator CONROY: Are you on wireless?

Mr Robinson : We will try and get a firm answer. We still think that nothing has changed in regard to the release of that product, but will try—

Senator CONROY: As at 30 April, my last information was 26 per cent were on the 100 tier. I am trying to find out what was on the 50 tier. But I accept your point entirely and Mr Quigley it stated repeatedly, despite people getting excited, that you should not jump to conclusions about the take-up rate. It was too early; the sample size was too small. Could you chase up the 100, 250, 500 and 1,000 dates and the—

Mr Heazlett : The 100 is available.

Senator CONROY: I conflated the two questions: the percentage on 50 and 100 and the date, if it is still valid. It may be that NBN Co. now sends you an email saying, 'No, we're not planning on releasing it on the dates that we previously announced.' I am seeking confirmation. Presumably, your corporate plan includes revenue to be earned from customers who take 250, 500 and a gig—it is probably relatively small in the early days—over time. I am assuming that there is some take-up of those products.

Mr Heazlett : It is projected, yes.

Senator CONROY: If those products cannot be offered on FTTN, revenue as against the existing corporate plan would have to be revised down. Correct?

Mr Heazlett : Yes.

CHAIR: Can we get an update on whether or not we are able to get officers to the table, as you said you would try and do, regarding the broadband constrained areas survey?

Mr Robinson : We are not able to any get additional officers, but we will do our best to answer the questions, including by some of my colleagues behind me.

CHAIR: Senator Ludlam, have you got questions now?

Senator LUDLAM: My questions are slightly off topic from where Senator Conroy has been heading. On the revised website there are three lines about broadband quality project. To paraphrase, the government is working with the company and private carriers to compile a ranking of broadband quality and availability in all areas of Australia which will be provided to the parliament the day before Christmas Eve. That will be published for comment, so that is fine. Who has carriage of that? Who is leading that project?

Mr Robinson : We do in the department.

Senator LUDLAM: Is it the same working group or task force that has carriage of that?

Mr Robinson : Yes.

Senator LUDLAM: How much new work is involved there and how much is simply assembling material that exists already?

Mr Robinson : Sorry, I missed the last part of your question.

Senator LUDLAM: How much new work is being done? So a ranking of broadband quality and availability—what are your primary sources or are you going out and doing new work to establish that?

Mr Robinson : I would describe it as pretty much all the new work. We have gone out to all the carriers to obtain information from them, including geographic coverage areas of types of technology, and information like exchange locations and capacity in the exchanges. We are analysing that at the moment with a view to having the report on the schedule you have mentioned.

Senator LUDLAM: But when you say almost all new work, I think you said, so there is no existing picture of regional broadband capacity in the country; you have had to go out and assemble that from scratch?

Mr Robinson : I am sure there probably is other work, but we are trying to do it nationally and based on the best information we can get available at the present. So it is looking at existing ADSL services, mobile services for that matter, HFC and fibre to the premise et cetera across different types of carriers and across the country. We are doing new analysis based on the best information we can get.

Senator LUDLAM: When you say 'provide a ranking', is that going to be by postcode or by census collection district? How fine-grained is your ranking going to be?

Mr Robinson : We are still going through the analysis, so it could vary. We are looking at what is called a DA level, 'DA' standing for—

Mr Heazlett : Distribution area—it is a Telstra distribution area.

Senator LUDLAM: That is an area smaller than served by an individual exchange?

Mr Heazlett : Yes, to characterise it, it is an area served by a pillar—you are familiar with the pillars in the street?

Senator LUDLAM: Yes. So it has a relatively small catchment.

Mr Heazlett : I suppose a rough average is around 200 premises.

Senator LUDLAM: Okay. Is that going to give us proxy information for the quality of the underlying copper network or not really?

Mr Robinson : It will make an assessment of the quality of the speed outcome, given the distances that apply within the DA area.

Senator LUDLAM: Yes, so it is a kind of ES?

Mr Robinson : It is not saying, 'Is the copper in this particular DA 20 per cent or 30 per cent worse than neighbouring'; it is making assessments of the distances involved, in particular, and therefore the speed outcomes under ADSL type services.

Senator LUDLAM: What are you expecting to publish? Are you going to be publishing graphic maps or very large spreadsheets, because there must be thousands or hundreds of thousands of these DAs?

Mr Robinson : Yes, we are working at on maps. I am not trying to be equivocal, but there is an immense amount of work being done and our time frame is quite tight.

Senator LUDLAM: True.

Mr Robinson : So we are still working through how we would do that, but we are working on maps.

Senator LUDLAM: Are these to be published? It does say that it is to be provided to the parliament. I would imagine that there would be a certain amount of commercially sensitive material involved in mapping that. We have not even been able to get a complete fibre backhaul map of the country, because different providers keep their networks separate.

Mr Robinson : Some of the information is being provided on the basis that we will aggregate it, so to speak, and not breach anything that is commercially sensitive. We think we can do that, though, in a way that provides useful information.

Senator LUDLAM: Okay. In terms of a transition across to a fibre to the node network, the pillars will serve a number of nodes—is at the right architecture or do you rip the pillars out?

Mr Robinson : Exactly how it is done depends on the architecture.

Senator LUDLAM: What is the hierarchy: do we go from exchange to pillar to node to premise? Or have I got that wrong?

Mr Heazlett : It is possible. Typically in fibre-to-the-node deployment a node would be traditionally have been located with a pillar. The pillar is a point of aggregation for the copper access network.

Senator LUDLAM: Does the pillar aggregate to roughly the same number of premises as a node? I understand there is a difference. I think it is a reasonably significant—

Mr Heazlett : The NBN architecture is still subject to development, and they are working through that. Typically in other areas nodes were broadly equivalent to pillars. Certainly in previous examinations—

Senator LUDLAM: That would tell me that as you are overbuilding an existing network you would be ripping the pillars out. We are not still going to have a network of pillars all over the country as these nodes are being expanded?

Mr Heazlett : It may or may not; there are decisions that can be made. You can put a node either side of a pillar. There are arguments for and against where you put it.

Senator LUDLAM: Are the pillars powered or are they passive?

Mr Heazlett : The pillars are powered from the exchange.

Senator LUDLAM: And nodes need to be as well?

Mr Heazlett : Nodes will need separate power.

Senator LUDLAM: So if I cut the power to a node I have wiped out the service for everybody within that catchment?

Mr Heazlett : If the power is cut—yes, you cannot provide a service.

Senator LUDLAM: To that individual node.

Mr Heazlett : Yes.

Senator LUDLAM: In a fibre-to-the-premises network, where it is end-to-end glass, there is no such vulnerability, is there? I am trying to establish—in the event of a power cut, at the moment, your existing copper service stays on.

Mr Heazlett : If you have a battery backup.

Mr Robinson : I think that is right, Senator. Often the question on this stuff is where the vulnerability is—

Senator LUDLAM: And at what scale.

Mr Robinson : Yes, exactly. It depends on the architecture. Under fibre to the premises you would need a battery backup within the house for the network termination device.

Senator LUDLAM: Yes. That is the household scale, but the network itself cannot be knocked out unless—

Mr Robinson : It could be if—

Senator LUDLAM: If the whole exchange goes out.

Mr Robinson : Yes.

Senator LUDLAM: Whereas, with the fibre-to-the-node architecture—you do not need battery backup at home—do the nodes require a battery backup, for example?

Mr Heazlett : Yes.

Senator LUDLAM: Each one does?

Mr Heazlett : Yes.

Mr Robinson : There are different types of fibre to the node. Some of our answers are the more generally used type. For example, there is new technology of, essentially, putting smaller nodes that can be powered from a house. There are different technologies and different ways of doing it. None of that has actually been settled yet in the case of the NBN.

Senator LUDLAM: Sorry, can you just repeat that? Nodes that are powered from the house, so a node at the premises.

Mr Robinson : Yes. There is technology being developed—essentially smaller nodes that are powered not at their own point but from elsewhere.

Senator LUDLAM: So, under that model, each household has its own node? Or am I reading it completely wrong?

Mr Robinson : No, they would be powered from the user's side.

Senator LUDLAM: Collectively? A catchment of 200-odd premises collectively powering a node that serves that catchment?

Mr Robinson : As I understand it, some of this is new technology and is being deployed in some areas internationally. They are nodes that are closer to the home, so more nodes but fewer houses, and powered from the house side in some cases.

Senator LUDLAM: And that goes on to your household electricity bill.

Mr Robinson : Yes. Arrangements as to how that is done need to be settled, but potentially yes.

Senator LUDLAM: All of these things are within the terms of reference of the review? The NBN Co. engineers and you guys are all nutting this out at the moment?

Mr Robinson : I think the NBN Co. review is looking at the various types of deployment, yes. I think it may be the case that it will not be entirely settled in their first piece of work, but they are looking at the different types of deployment.

Senator LUDLAM: We spoke earlier about the sensitivity of speeds that you can get to the distance from the nearest node—the length of the copper has a material impact. Does the government have a maximum distance that you want all premises to be from a given node, because from there we can work out what kind of speed tiers you will be able to offer, presumably.

Mr Robinson : I think that the answer is no on whether the government has a maximum length.

Senator LUDLAM: By the time these reviews have all been concluded, is that something you will have?

Mr Robinson : Once the reviews are concluded and NBN has a corporate plan and new deployment strategy, their approach to that needs to be outlined as part of that.

Senator LUDLAM: The previous government's policy was that there were three effective service qualities: the satellite, the wireless and the fibre-to-the-premise footprint. How many of those tiers are there likely to be that you will be able to deliver, or are you willing to entertain a fibre-to-the-node network where you are going to have highly variable service qualities? If you have got people stranded on five kilometres of copper, they are going to get a very different service quality from people stuck on 50 metres, for example.

Mr Robinson : I think the answer to your question is that there will be more technologies deployed. The government has made that clear. The exact arrangements as to what that means have not been settled. As a general policy position, I think the government said in its initial statement of expectations to the company that the policy was speed objectives across the country with the company having flexibility as to technology deployment.

Senator LUDLAM: But sooner or later you are going to bump up against the fact that you are stuck with an inferior technology—and I think this is where Senator Conroy was heading before—that is not going to be able to deliver certain speed tiers to all parts of the country evenly.

Mr Robinson : I think the principle of technology flexibility is intended to allow the company to have the flexibility to choose the best technology to meet the speed tiers.

Senator LUDLAM: But we know what the best technology is and it has been abandoned by this government's policy. We already know what the best technology is.

Mr Robinson : Best, including the cost of deployment and the speed of rollout and all other factors considered.

Senator LUDLAM: Okay. I might come back later, Chair.

Senator CONROY: What are the data usage trends in Australia at the moment?

Mr Robinson : We can get that information for you, Senator. The most recent years have been in download volume increases in the order of 30 per cent. We would be happy to get the most recent numbers for you.

Senator CONROY: There is ABS data, and Cisco has data, I understand.

Mr Robinson : Yes.

Senator CONROY: Can you have some of that made available to us?

Mr Heazlett : I noticed their forecasts. But ABS data is showing substantial increases.

Senator CONROY: Yes, so they are not consistent. I am not sure that we have got ABS data that we can plug up, but my understanding is that the volume of data downloaded by fixed-line broadband in the three months ended 30 June increased by 20 per cent compared with the three months ended 31 December—so that was just for three months. So you are not familiar with any forecast that shows that trend is dropping off or slowing down, flattening out, plateauing—

Mr Heazlett : I did see reference in the last week or two to Cisco actually indicating that there may be some plateauing in the future.

Senator CONROY: I have seen the same information.

Mr Heazlett : I have not looked at the report but—

Senator CONROY: I think that 'plateauing' is not quite the right borrowing of the words that I was offering you as an alternative. As I understand it, Cisco has gone and tested their own projections against actuals and found that they were within 10 to 20 per cent, but under in all cases. So all their forecasts so far have been slightly under their projections but roughly on track with their projections.

Mr Heazlett : Certainly the rate of increase that Cisco had previously been projecting had been reduced in the last reference I saw.

Senator CONROY: We will see if we can dig it out for you like we did with the I/O network, Mr Heazlett. Does the current NBN corporate plan have products available for customers to migrate to higher speeds should their data requirements grow?

Mr Heazlett : The corporate plan provides a range of access speeds that people can—

Senator CONROY: If you are on fibre to the premise and you want to increase your speed and increase your limits, you can do that because there is a range of products you can do that with. Last time I checked, and these are old figures, there were 40-plus RSPs and 400-plus plans in the marketplace. I am sure that is a very old and outdated piece of information.

Mr Heazlett : NBN allows RSPs to migrate up.

Senator CONROY: So you can upsell.

Mr Heazlett : Yes.

Senator CONROY: Is there a known limit on fibre for data transfer?

Mr Heazlett : The limits depend on the electronics at either end. I am trying to recall what is the highest speed—

Senator CONROY: The current lab in Germany or Japan on a single strand of fibre. No-one has found the limit yet, have they, according to the laws of physics? The electronics are the limit.

Mr Heazlett : I think there is a physical limit but I would have to go and talk to one of my technical friends. The laws of physics do have limits about the number of bits that can be transferred per wavelength and there is a limit to the number of wavelengths.

Senator CONROY: I look forward to receiving that update. If customers do not have higher speed tiers or higher plans that they can transfer to, the existing revenue forecasts in the corporate plan would have to be revised down. If the increases in speeds are not available and we have got revenue forecasts that show that people over time increase their consumption but the technology does not allow them to increase their consumption then by definition the revenue forecast projections would have to be revised down also.

Mr Robinson : It is correct that a new deployment model for NBN with different products and different pricing will mean they will have to review their pricing.

Senator CONROY: So review the pricing of the existing fibre products or review the pricing of their fibre to the node?

Mr Robinson : There will be a revenue impact and the revenue impact will have to be assessed.

Senator CONROY: That will be a negative revenue impact.

Mr Robinson : Less very high-speed—

Senator CONROY: Unless you are suggesting NBN Co. are going to raise their prices for the existing products.

Mr Robinson : I was not suggesting it. I was actually trying to agree that there would be a revenue impact, but it has to be assessed.

Senator CONROY: But it is a negative revenue impact.

Mr Robinson : Yes.

Senator CONROY: Not having as much capacity to increase your consumption for the higher tiers, the higher products, has a negative revenue impact.

Mr Robinson : Yes. And there is also a cost impact. The cost of deployment should reduce under a fibre to the node deployment model.

Senator CONROY: Yes, but we had a long discussion about what was more important early. We had a discussion about the costs of cap ex and uptake. So let us not try and go backwards and put a reconfiguration on the evidence we gave earlier. We did talk a little bit about multicast before so I will skip that seeing we have already done the multicast discussion. How many ports are there on the existing NBN Co. network termination device?

Mr Heazlett : The standard network termination device has four data ports and two MED-V ports.

Senator CONROY: So six ports.

Mr Heazlett : Six altogether.

Senator CONROY: What is the data capacity of four ports on the NTD? Can all four services take a gig if they wanted to?

Mr Heazlett : Separately, no; I do not believe so.

Senator CONROY: Really? I know for a fact that you can put four 100s on, so I am interested in it theoretically; I am not saying that it is going to happen.

Mr Heazlett : I am not sure that it could.

Mr Robinson : We will take it on notice, but he has expressed the view that—

Senator CONROY: I am not being definitive; I am just surprised by your answer. It does not logically occur to me, but it is possible.

Mr Heazlett : Because of the splitter.

Senator CONROY: Under the existing NBN corporate plan, do we assume that there are some applications for health or education that these extra ports could be used for? Are there revenues assumed from these extra ports?

Mr Heazlett : I am trying to recall. My recollection is that in the last corporate plan there were not material revenues from that.

Senator CONROY: So they put four ports there just because they liked four holes in a box? They were never planning on selling any services using them?

Mr Heazlett : The four ports would allow people to access different services from different providers.

Senator CONROY: So it is possible to earn revenue from more than one provider using more than one port.

Mr Heazlett : Yes, but—

Senator CONROY: So with four ports you can earn more revenue.

Mr Heazlett : Yes.

Senator CONROY: How many data ports do you expect there will be on an FTTN network termination device? Think carefully; you have advice.

Mr Heazlett : That would depend on the nature of the service provided and whether there was in fact a termination device provided.

Senator CONROY: So no-one has given you any advice on this whatsoever.

Mr Heazlett : There is nothing definitive. It is an open question that has a range of potentially different answers.

Mr Robinson : That is my recollection too. There is advice on these issues floating. There is no decision on how it will be done. My recollection is that there are options in that regard and nothing has been settled.

Senator CONROY: So NBN Co. are considering having more than one data port on an NTD on a fibre-to-the-node product.

Mr Robinson : I am not sure precisely what they are considering, but I think—I am not sure—they are looking at the options for how fibre to the node should be deployed. There are trade-offs in all of that. As I mentioned, nothing has been settled.

Senator CONROY: I might come back to that one for you. I just want to go through what we have talked about this morning to sum up. The current revenue assumptions in the current corporate plan would be revised down in the following cases. NBN Co. faces infrastructure-based competition in HFC areas; the rollout in HFC areas is delayed until 2016 or beyond—which also hits your revenue forecasts, so that is two separate issues on the HFC. NBN Co. faces higher wireless-only assumptions in FTTN areas—though I think you want to go away and get evidence about that or take some advice from the boffins in your department.

Mr Heazlett : We wish to analyse the issue.

Senator CONROY: I think you have analysed the issue many times. It should not take you long to get that answer for us. I continue the list. NBN Co. is not able to provide premium business or enterprise products in FTTN areas unless a service is connected in another way—in other words, I am comparing apples with apples; I am comparing what the government's network will provide and what the new proposed government network will provide. NBN Co. is not able to provide—let us just say this for the moment—100-meg, 250-meg, 500-meg or one-gig products to residential customers in FTTN areas except if, again, somebody decides to do something themselves. Residents or businesses in FTTN areas have a limited ability to migrate to much higher speeds without a further capex investment from NBN Co. NBN Co. faces lower data traffic across its network. NBN Co. is not able to provide its current multicast product in FTTN areas—though, again, you wanted to go away to confirm that. And NBN Co. is not able to provide services over additional ports, though you are suggesting that perhaps they may have an additional port. There is a whole suite of things there—and I do not mean a suite of products, but a whole range of both products and services—that all have a negative impact on the revenue forecast against the current corporate plan; is that a fair summary of the discussion we have had this morning? I did put in a couple of qualifiers, though, that you wanted to go away and get some other advice.

Mr Robinson : As part of the discussion, I have also been making the point that all these issues need to be considered as part of the strategic review and corporate planning process.

Senator CONROY: I am not arguing that, I am talking about factually—

Mr Robinson : And in terms of the overall business costs, there are also cost issues associated with these products.

Senator CONROY: There is no argument that providing an inferior service can be done cheaper, but I just want to stay very specifically on the revenue forecasts that you have in your current corporate plan and whether or not they can be achieved if the FTTN model replaces, largely, the FTTP model. So, costs.

Mr Robinson : Costs.

Senator CONROY: I noted that the government broadband policy plan is to roll out a network in two stages—is my reading of the plan correct? Twenty-five by 2016 and 50 by 2019—that is the announcement that the government made; that is government policy?

Mr Robinson : How the NBN is rolled out is pretty much right in the frame of a strategic review, and the government has, apart from the statement of expectations—

Senator CONROY: If they are indicating they are changing their plan, I am fine, but I am just wondering—

Mr Robinson : I am not indicating that.

Senator CONROY: I was not trying to put words in your mouth, I promise.

Mr Robinson : The key policy document for what the government's policy is at the moment is the initial statement-of-expectations letter that went to the company. It is public. The whole deployment strategy is a question for the strategic review, and Dr Switkowski outlined his approach to that at estimates last week.

Senator CONROY: No, I am just asking you very specifically: the government's stated policy document talks about two stages—

Mr Robinson : Well—

Senator CONROY: No, if the review comes back and says something different, I am not going to hold you to that, but I am saying 'their current policy document'—

Mr Heazlett : It talks about two speed objectives at two points in time.

Senator CONROY: Yes. Now, just to assist, Mr Heazlett, it has been suggested to me that if I had said the fibre was 'practically unlimited', that would have been a fairer way to put the question to you, to avoid the, 'Well, yes, there is a limit.' So I look forward to your answer. I am just looking to understand, in terms of costs, on what the stated government policy is—and that is all I can work from; I cannot work from anything else—and that stated policy is 25 meg by 2016 and 50 meg by 2019. That is what the document says.

Mr Robinson : I do not have the policy document in front of me.

Senator CONROY: This is fairly well established.

Mr Robinson : My recollection is that it refers to goals and speed to use, et cetera, but how that will be implemented and the costs of implementing it are being considered.

Senator CONROY: So how many truck rolls would that suggest to you?

Mr Robinson : I do not know.

Senator CONROY: Before you make that statement, do you want to see if you have ever received any advice on that statement?

Mr Robinson : We may have received advice on that, but whatever advice we have got and what actually happens, in terms of NBN—

Senator CONROY: No. Answer my questions, please. I have offered you the opportunity to make sure you do not mislead the committee, so you do not need to give a commentary afterwards. I am asking you to answer my question. I said, 'Have you received any advice?'

Mr Robinson : We have.

Senator CONROY: If there were more than one truck roll required, would that increase the rollout costs?

Mr Robinson : I am actually really not trying to be difficult on some of these questions, but whether that increased the costs would depend on the cost of the first truck roll.

Senator CONROY: If you are delivering a box that delivers speeds of 25 meg by 2016 and then you have to go back with a second box or a chipset—whatever you do—it does not matter what the piece of equipment is, it is the truck roll cost that I am talking about. If there is more than one truck roll required, would that increase the rollout costs? It seems like one plus one equals two and two is higher than one. It is a maths equation.

Mr Robinson : I do not think it is. It might not be one plus one. These issues are—

Senator CONROY: Okay. You could send a truck and a motorbike, but there is still someone driving the motorbike.

Mr Robinson : I just think the cost implications of various deployment strategies are absolutely being fully reviewed as part of the strategic review by a range of people. They will be producing a result and we can all look at that when it is produced.

Senator CONROY: Sorry, would you say that again.

Mr Robinson : These matters are a question for the strategic review and it depends on the deployment model used. At the moment, if we are talking truck rolls, there are more than two truck rolls under the current deployment model for fibre to the premises.

Senator CONROY: But I am not asking about the current situation; I am asking how they are physically going to deploy the network and whether or not there is more than one truck roll. I know exactly how many truck rolls are involved currently—one answer could be: not as many as there should have been. I am seeking to understand the government's policy, so I am asking you. You are in charge of implementing it and giving advice and you have received advice on this, as you have admitted. I am asking: is it a factual statement that two truck rolls would be more expensive than one truck roll?

Mr Robinson : I think that is not necessarily the case. It depends what work they are doing under each element of the truck rolls. They are different—

Senator CONROY: No, if you were to say that it is possible to merge the two truck rolls into one, I would accept that. But, if you went with the current government plan as enunciated in the lead-up to the election and since the election, there are two truck rolls, to deliver 25 and to deliver 50. It is possible there will be a change in plan in the future and they will put it all together. I accept that. That is a fair and reasonable statement, but, unfortunately for you, you cannot speculate that that might be the case. So I am not asking you to speculate on what might be happening; I am asking you to explain the structure of the rollout that is currently publicly proposed.

Mr Robinson : There is no current proposal that I am aware of as to how fibre-to-the-node deployment will work in the detail of it, and that has been scoped by the company—

Senator CONROY: But you have said to me that you have received advice. What does your advice tell you? I am not asking about your advice to the government; I am asking: what does the advice tell you about whether or not it is more expensive to do two truck rolls than one?

Mr Robinson : There would be ways of doing the deployment which will be more expensive than alternatives.

Senator CONROY: So doing two truck rolls will be more expensive than doing one truck roll?

Mr Robinson : But there has been no decision about it.

Senator CONROY: I am not asking you to give me the outcome of the review. I am asking you to explain the stated government policy. If the government changes it, I will not be holding you to account for it. If the government changes its policy, then that is fine. It is up to the government to do, not for you to do. So I am simply asking about the stated objective of 25 by 2016 and 50 by 2019, which implies two truck rolls. I think we agreed that that is what it could mean, and that is a more expensive, inefficient way to do it.

Mr Robinson : It is one way of doing it, not necessarily the only way, and there has been no decision about how the government will implement its policy.

Senator CONROY: You could deploy vectoring and aim for the 50—I am agreeing with you. I am just making the point that the currently announced two-stage process, meaning two truck rolls, is, according to your own words, a less efficient way to do it, which in layman's terms means it is a more expensive way to do it. If the government change their position, then you will celebrate and Mr Renwick, who will suddenly have discovered a cost saving, will be even happier in Finance. You are getting off very lightly today—I hope you realise that!

Now let's go to one of my favourite topics. Under the current DA, Telstra provides NBN Co. with the mediated infrastructure that is fit for use; correct?

Mr Heazlett : That is correct.

Senator CONROY: Hopefully asbestos remediated even!

Mr Heazlett : If it is fit for use, it would be.

Senator CONROY: Is the government's objective to ensure that any infrastructure it receives is fit for use?

Mr Heazlett : The new arrangements with Telstra are still under consideration.

Senator CONROY: So the government have not made any decision around ensuring that the copper network they want to buy actually works?

Mr Robinson : Clearly any acquisition of copper will be done on the basis that it is of value to NBN Co. The discussions with Telstra are not really something we can comment on.

Senator CONROY: I generally would not expect you to. The previous government went into the process wanting to ensure that the infrastructure provided by Telstra was fit for service. I am just assuming—and I am happy to be wrong—that if we were the only government in the world to buy a copper network we would be making sure that it actually works. But if there is no policy decision in that field, that is cool.

Mr Robinson : These are all again for the review. But obviously the company should not be acquiring infrastructure that is not of value to them.

Senator CONROY: Mr Renwick, how does Finance feel about buying an asset that was impaired significantly?

Mr Renwick : We would be expecting value for money from whatever acquisition was made.

Senator CONROY: Excellent. What are some of the things that can prevent or attenuate VDSL vectoring services over copper lines? What advice have you got on that? I am sure you both must have copious advice on this.

Mr Heazlett : There are issues. The capability of the copper line is dependent on a wide range of circumstances. There can be the nature and quality of the copper that was originally installed. There are a range of different gauges of copper used in Australia. There are issues about the number of joints that may exist in the copper line and the extent to which they are protected or weather sealed. There are a range of other mechanisms that were being used to ensure people obtained voice services in the past, which could be an impediment to—

Senator CONROY: Is this all the stuff I heard about or are you talking about something else?

Mr Heazlett : There are various joints. Certainly there is all that wonderful gel stuff that has received a large amount of publicity in the past. In a former life I used to see a lot of it.

Senator CONROY: Are there any other—

Mr Heazlett : Water.

Senator CONROY: Water? Is that the famous 'soggy'?

Mr Heazlett : It once again depends on the nature of the seal and the insulation around copper cable and the degree to which water ingress occurs and how much that affects things. There can be issues of noise on the line, but vectoring does seek to address noise issues. There are no doubt a range of other aspects as well.

Senator CONROY: Taking into account all of those things, is it good value for money? I have a Harbour Bridge I would like to sell you next; any interest? No.

CHAIR: Can we just go back to the broadband constraints survey: you indicated you were willing to answer questions on that. Can I ask you whether or not you have received databases from all of the contributing companies about the presence of pair gain systems and remote integrated multiplexes within the existing network?

Mr Heazlett : My understanding is that we have received information about pair gain systems but that it is subject to further clarification.

CHAIR: Sorry: clarification that you have received information.

Mr Heazlett : No. About the nature of the information provided. My understanding is that there is not fully definitive information yet about.

CHAIR: So what information have you received?

Mr Heazlett : I haven't got the detail of it. There are details about but there is a need for further clarification about the precise nature of the pair gains involved.

CHAIR: Because you have received incomplete information or because you can't find out the answer to the question from the officers that you have asked for the purposes of today's hearing?

Mr Heazlett : I think I would characterise it as further clarification in understanding the impacts of those pair gains systems.

CHAIR: I have got some questions specifically about remote integrated multiplexes or RIMs. What are the potential uses or impacts on fibre-to-the-node style networks of the presence of RIMs?

Mr Heazlett : My understanding is that in fact RIMs could well facilitate—

CHAIR: I would like you to tell me how.

Mr Heazlett : RIMs in some circumstances provide a similar service—

Senator Conroy: Fibre-to-the-node service—we just didn't know it!

Mr Heazlett : in that a RIM provides a distribution point—in fact a powered distribution point—before aggregation of services back to an exchange in a similar way to the way a node would operate.

CHAIR: Have you done an analysis of the size of the fibre currently connecting RIMs to exchanges; and, if so, can you tell the committee?

Mr Heazlett : No, I do not have information on that currently.

CHAIR: So potentially the fibre would have to be replaced to the RIMs anyway.

Mr Heazlett : The nature of fibre optic cable is that usually it is not the cable itself that determines the characteristics—

CHAIR: Do you know how many services emanate from the average RIM?

Mr Heazlett : I would have to check on that.

CHAIR: I can tell you: it is usually up around the 1200 mark, depending on the density of the population that they are serving. Do you know the size of the fibre that currently serves those RIMs?

Mr Heazlett : An individual fibre is able to carry, depending on the electronics at each end, a large amount of data.

CHAIR: You can do the maths on that if they are two-meg pieces of fibre that are currently serving the RIMs. Are you aware of the current constraints because of the size of the fibre and other physical constraints of RIMs to the extent to which ADSL services are able to be provided through those RIMs?

Mr Heazlett : A RIM in itself will not enable ADSL services to be provided. You would need to in effect install a node at a RIM to provide ADSL services.

CHAIR: So pretty much all that a RIM would provide at the moment is a source of power and a box that may or may not be the right size.

Mr Heazlett : It will enable voice services to be provided to customers.

CHAIR: Sorry: that is a separate question. Can you go back to my question, which is: so all a RIM would currently provide is power—but unproven because they could not even house the ADSL ports when the CMUXs were created for the purposes of providing ADSL from RIM—and possibly the box; can you confirm that?

Mr Heazlett : I am not familiar with the individual specific RIM, but in effect a RIM is a mini exchange.

CHAIR: In that it provided at one point fax and voice services and had to be modified substantially to provide ADSL services. Are you familiar with the history of RIM technology?

Mr Heazlett : I have not studied it closely, but I am broadly familiar with it.

CHAIR: What have you been advised that RIMs will be capable of providing in a FTTN environment?

Mr Heazlett : A RIM in itself will not provide FTTN services, but a RIM arguably could be replaced, for example, by a node.

CHAIR: What would the benefit of that be to the network? Why would you use an existing RIM? Is it because there is power to that site?

Mr Heazlett : No, the RIM is the aggregation of the copper lines to those premises.

CHAIR: Let me get this clear. You can use the existing copper emanating from a RIM for the purposes—

Mr Heazlett : Depending on the length of them.

CHAIR: No, not 'depending'—for the purposes of delivering FTTN services. Is that what you are saying to this committee?

Mr Heazlett : If—

CHAIR: Not 'if'; yes or no.

Mr Heazlett : I am trying to be precise.

CHAIR: I am trying to be precise too.

Mr Heazlett : A RIM provides a distribution point for copper lines—

CHAIR: I know that, with respect.

Mr Heazlett : But those copper lines could then be employed for the provision of DSL services.

CHAIR: Have you been advised of that?

Mr Heazlett : I have had some technical advice in the past about the nature of various technologies and infrastructure in the Telstra network.

CHAIR: But in the context of this government's policy of a fibre-to-the-node network, can you tell this committee whether the copper emanating from a RIM will be suitable for delivering services through a FTTN network as envisaged and articulated by the current government?

Mr Heazlett : I have not at this stage looked specifically at that, but to the extent that there is data on the nature of the copper emanating from a RIM it will feed into the broadband quality analysis.

CHAIR: So this kind of detail is part of the current survey?

Mr Heazlett : If, for example, a RIM is only provided that will feed in as generating very low quality broadband or non-availability of broadband.

CHAIR: So is part of this analysis of RIMs and their capabilities forming part of your broadband constraints survey?

Mr Heazlett : To the extent that DSL services are unable to be provided because of the presence of a RIM, yes.

CHAIR: No, that is a separate issue. We are now talking about DSL services from the RIM, not services that will not be provided because the RIM is there. We are talking about the prospect of DSL services to be provided from every service that is provided.

Mr Heazlett : Broadband quality is looking at what is available in existing circumstances. So a RIM would be examined from the viewpoint of not making available broadband services.

CHAIR: How will you get the information about how many actual DSL ports are in each RIM? Is that going to be provided by Telstra?

Mr Heazlett : My understanding is that the request includes the availability of ports.

Mr Robinson : We will correct it if we are wrong, Senator, but I understand that we have got information on the availability of ports.

CHAIR: In each RIM?

Mr Robinson : I will check that specific point, but the answer is apparently yes.

Mr Heazlett : We are checking. For each provider we have requested the number of ports they have available.

CHAIR: That is a separate question for each exchange because Telstra do not allow other providers to put DSL ports in their RIMs—or last time I looked they did not. So it is a very specific question for Telstra.

Mr Heazlett : Yes, and for each area that Telstra provides information on we have asked for the number of ports available.

CHAIR: I want to make sure the detail of information you are gathering is detailed enough. When you ask, for example, Telstra, do you ask the availability of DSL services emanating from a particular exchange or RIM or do you ask them for the exact number of operating DSLs that are currently available? It is an important distinction.

Mr Robinson : Can we just take that on notice? We may be able to do it today—

CHAIR: I am happy for you to take that on notice, but often it is the case that a number of ports have been installed but only a finite number are able to function at any one time. For example, within RIMs there are constraints on the number of DSL services that can be provided at any one time, even though there may be a larger number.

Mr Robinson : Okay. We will take that on notice.

CHAIR: With respect to small pair gain systems that service, in particular, regional areas, although I did some quite detailed investigation of this some years ago, I am not familiar with the current status of some of the older, smaller pair gain systems operating from regional exchanges. Do you have that kind of information with you today—about how many small pair gain systems are emanating from which regional telephone exchanges? Do you have a comparative database from which you are working to measure the information you are being provided by service providers on this material, to compare it?

Mr Heazlett : Sorry, comparative to what?

CHAIR: Compared to the status of the exchange—as it has been provided previously. It is all about getting good data, so I am just trying to ascertain whether or not you are getting data of sufficient detail to inform you of the capability of the existing copper network.

Mr Robinson : I think we will have to take that on notice, too. We do have information on small pair gains. As to the level it is at, I will have to check. It is our intention, when the report comes out, to make it clear what information we have available to us and what we used, what our methodology was and then what the results are. On all of this, we appreciate that there will be questions, and people will look at the methodology and find ways to improve it, potentially. That is our intention and we are working flat out on that at the moment, with the aim of getting the report done on time.

CHAIR: Just one more question with respect to the quality of the copper: are you aware that copper of different gauges has been used over the years; and will your study differentiate between the gauges of copper used in the copper network? For example, I know that, in the late 90s period, a finer gauge of copper was used in the Telstra network and that that has constraining capacities on its potential use for VDSL or DSL style services. Do you go into that level of detail?

Mr Robinson : We are aware of the issue, but my understanding is we do not go into that level of detail.

CHAIR: Can you take on notice the different gauges of copper potentially deployed in the Telstra network currently and what the differences are in performance on the DSL style network?

Mr Robinson : Yes.

CHAIR: And can I suggest that you also do look at that because, kind of ironically, the newer the system, the finer the copper gauge.

Mr Robinson : Okay.

CHAIR: So the date of construction is not necessarily an indication; there are other factors that constrain it with the older networks.

Mr Robinson : Yes. We will take that on notice.

CHAIR: I know Senator Thorp has a couple of questions, but can I just check whether Senator Ludlam has some.

Senator LUDLAM: I have one last one, which is probably a simple yes or no answer. Do you know whether NBN Co. still intends to release a 1,000-down, 400-up fibre plan this December?

Mr Robinson : Our understanding is—

Senator CONROY: Do you have an update?

Mr Robinson : Yes. The exact timing has not been settled, but the short answer is, we believe, yes. We were checking, and we were about to say the answer to that is yes. Whilst we are on that, Senator Thorp asked about the number of RSPs on fibre in Tasmania, and we are advised the answer is 34 and, typically, on the mainland it is 50 plus. And Senator Conroy asked about the AVC profile, and as of September it was 46 per cent on 12-1, 25 per cent on 25-5, one per cent on 25-10, five per cent on 50-20 and 23 per cent on 100-40.

Senator CONROY: Sorry; could you just read those out again?

Mr Robinson : At September it was 46 per cent on 12-1, 25 per cent on 25-5, one per cent on 25-10, five per cent on 50-20 and 23 per cent on 100-40.

Senator CONROY: Thank you very much for that update.

Senator THORP: I refer to the Digital Hubs program. You would be aware of the program and how it is helping people come to grips with the NBN and its potential. What is the future of that program?

Mr Robinson : We will have to take that question on notice. It is another part of the department. There were questions asked in Senate estimates last week. It is part of our digital economy programs.

Senator THORP: What about the Digital Enterprise program.

Mr Robinson : Similarly, the same thing.

Senator THORP: So the future of neither of those programs is certain?

Mr Robinson : I would not say that. I honestly do not know. I am personally involved in the NBN reforms, our digital economy programs. I think some answers were provided in estimates last week but I have to take it on notice to check the record.

Senator THORP: You would be aware of the contract side by Visionstream of some $300 million to roll out NBN in Tasmania, but are you aware of any approaches being made by Visionstream to the department or to the minister for extra funds?

Mr Robinson : There is a contractual discussion happening between Visionstream and NBN Co. and all the actions, as far as I am aware, are through that process. There is essentially a contractual dispute but the discussions are between the Visionstream and NBN Co.

Senator THORP: What is your understanding of the nature of the dispute?

Mr Robinson : I believe it is essentially over price. Those questions would best be directed to NBN Co.

Senator THORP: Certainly we will do that when the opportunity arises.

Senator CONROY: Will the copper network on your advice require remediation to deploy VDSL and vectoring to achieve speeds of 25 to 50?

Mr Robinson : Potentially parts of it will.

Senator CONROY: I noted that Mr Adcock advised the estimates committee that the following question from Senator Lundy was valid—a new and unusual answer in a Senate estimates hearing—that the deployment of VDSL requires ever line to be tested. I assume you are sitting next to him at the time.

Mr Robinson : We were there, yes.

Senator CONROY: How many premises in Australia have a copper line?

Mr Robinson : I have to take that on notice, Senator. Our understanding is eight million active services. There may be a larger number of inactive services.

Senator CONROY: So if VDSL were to be applied to 71 per cent of households, 71 per cent of eight million roughly—whatever that comes to, let us just say it is millions.

Mr Heazlett : Yes.

Senator CONROY: How many of these lines are you aware that have been tested to date?

Mr Robinson : In terms of testing for the potential deployment of fibre to the node by NBN Co., I would think very few because they are still at the scoping stage of what the issues are.

Senator CONROY: How many FTTN field trials has NBN Co. or Telstra completed to date excluding MDU?

Mr Robinson : You should direct that question to NBN Co.

Senator CONROY: I think Dr Switkowski last week said they were starting an MDU basement trial and I have read in the papers that Telstra did a secret trial—I think that was the heading. Are you familiar with that article?

Mr Heazlett : I have seen the references to that report, yes.

Senator CONROY: Have you been advised of the outcomes of that trial?

Mr Heazlett : No.

Mr Robinson : No.

Senator CONROY: Do you know if NBN Co. have been advised of the outcomes of that trial?

Mr Robinson : I do not know. They may have been.

Senator CONROY: In relation to copper remediation to be fit for use for VDSL, how will it be possible to determine the cost of the remediation before testing of each of the lines happens? How are you going to get a cost?

Mr Robinson : I think that will be an issue for the company to consider, partly as part of the strategic review, but partly as their model going forward after that. I do not know precisely what they will have planned yet, but it will have to be something that they resolve.

Senator CONROY: Mr Renwick, it seems a fairly important question for the Department of Finance.

Mr Renwick : I would have to rely on my colleagues here.

Senator CONROY: Mr Robinson, what did you say was the methodology, again?

Mr Robinson : I think it is a question for the company. You would have to ask them. I am not sure they have settled it, but it is an issue for them to consider as part of the strategic review and then the implementation of arrangements after that.

Senator CONROY: I do not want to make you stay and listen to anybody else's Senate estimates hearing, but I am sure you will be particularly interested if you are able to at least monitor, or even stay and watch the picture show, the evidence from some of the witnesses later in the afternoon, which may help inform you of the issues around the remediation. I invite you to at least watch the monitor, if not sit up the back of the room, Mr Renwick. You might learn some exciting new things. Given that the copper remediation cost remains completely unknown at this stage, is it possible that the combined capex for an FTTN rollout could exceed $2,600 per premise?

Mr Robinson : I would not want to be seen to be agreeing to your first comment, that it is completely unknown—

Senator CONROY: It is completely unknown. Mr Hancock, who, we understand, does have some experience, has agreed that you have to test every line.

Mr Robinson : I think it is possible to make some high-level numbers based on international experience and what knowledge there is—

Senator CONROY: International experience of how much it rains in Australia? That will be useful.

Mr Robinson : There is a range of international experience.

Senator CONROY: So there is a lot of international experience about Australia's weather conditions, the gauge of Australia's copper, how much gel has been used—there are international comparisons for that?

Mr Robinson : There are a range of international comparisons. Some are not applicable; some potentially are.

Senator CONROY: Are you aware of any international comparisons that have similar weather patterns to Australia or similar use of gel to Australia or similar issues to some of those we talked about earlier?

Mr Robinson : I think one of the issues for the strategic review is the cost of using the copper network, including putting it to a standard to meet the speed objectives of the government. They are doing work on that. It is possible they will have—you would expect they would have—estimates and numbers when that work is completed. That was my point.

Senator CONROY: No other country has Australia's weather pattern; that is a fairly self-evident statement.

Mr Robinson : Yes, Senator.

Senator CONROY: In terms of how much water gets into our network, is there an ability to do a comparison?

Mr Robinson : I think that there is an ability to do a comparison and some of that work is happening as part of—

Senator CONROY: Are you prepared to mortgage your house against that figure?

Mr Robinson : I have said that I think there is an ability to do a comparison, and the strategic review is probably doing that work as we speak.

Senator CONROY: So there is an international comparison of Australia's copper loop LAN?

Mr Heazlett : There is a large amount of detailed analysis being undertaken as the strategic review is under way. We are not trying to second-guess that at the moment and, when the review material is available to us, we will analyse it and provide advice accordingly at that time.

Senator CONROY: What is bridge tap? Is there an international comparison on how many bridge taps are in our network?

Mr Heazlett : A bridge tap is one of those joins that is used to enable the continued provision of voices—

Senator CONROY: So is there an international comparison of how many bridge taps Telstra have used?

Mr Heazlett : I would need to take advice on that.

Senator CONROY: Or pair gains—and I think that Senator Lundy had a lengthy conversation with you about that—are we able to draw on any international comparisons about how those issues have been done by Telstra?

Mr Robinson : As I said, Senator, these are issues for the strategic review. The strategic review has not yet completed its work. I think that they will looking at international comparisons. They will also be looking at whatever information they have available on the Australian circumstance.

Senator CONROY: If you had said that you were going to consult Telstra, we would not be having some of this discussion. But when you try to claim that there are international comparisons that are going to be meaningful, I am struggling with that.

Mr Robinson : I think they would be in the mix as would Australian numbers including discussions with Telstra.

Senator CONROY: I am happy to pause there for lunch.

CHAIR: All right. We do need to go to lunch so we will suspend proceedings for 30 minutes and resume with the department.

Proceedings suspended from 12:07 to 12:46

CHAIR: We shall resume. I understand from Senator Conroy that we will need the department for another half an hour today, and then we will continue with our program. Also, I want to foreshadow that, as previously requested, we will need the department tomorrow morning as well. So we will speak to you about that through the secretariat.

Senator CONROY: So, just maintaining my discussion about maintenance costs: in NBN Co.'s current corporate plan, what are the FTTP maintenance costs at the end of the billed period?

Mr Heazlett : At the end of the billed period in 2020-21, operating expenditure is projected to be $3.15 billion.

Senator CONROY: In Telstra's 2012 annual report, they booked $3.75 billion in operations, of which about $1 billion is popularly estimated to be copper plant maintenance. In 2012, BIS Shrapnel did some analysis on maintenance costs, estimating up to $700 million of an annual saving on maintenance costs from an FTTP network. Are you familiar with that report? Have you seen that BIS Shrapnel report?

Mr Heazlett : I do not recall the BIS Shrapnel report, no.

Senator CONROY: But you have seen the media reports about that? They have been fairly regular.

Mr Heazlett : The BIS Shrapnel one does not ring a bell; I may or may not have seen it.

Senator CONROY: Are you in a position where you can comment on whether the annual op ex for maintaining a copper plant materially is higher than for maintaining an FTTP network? Do you have any international experience you could draw on on those issues?

Mr Heazlett : I think it is generally accepted that there is a higher cost of maintenance for copper as opposed to fibre.

Senator CONROY: So, if NBN Co. had to maintain more than one fixed-line access network, would the op ex assumptions in the current corporate plan need to be revised up? If they were actually looking after both the fibre network that they have, plus maintaining the copper network, it would seem logical that the operating expenditures would be higher.

Mr Robinson : We would expect them to be, yes, and of course capital costs are lower.

Senator CONROY: You must have been reading my mind, Mr Robinson; you know what I am going to ask next! Perhaps if you just wait to answer the questions—because you are just embarrassing me when you answer the questions before I ask them. So, we agree that the operating expenditures are higher by maintaining both the copper and the fibre networks, and we will come to the cap ex costs in a minute. Will new customer-premises-equipment modems be required for customers to receive at least 25 megs over VDSL?

Mr Heazlett : I am not sure that there is a conclusive answer on that.

Senator CONROY: Do you have any advice from anybody who might know?

Mr Robinson : We have received advice on that—

Senator CONROY: What does the advice say?

Mr Heazlett : My understanding is that if you are to receive the full benefit of a vectored signal you then need a suitable modem.

Senator CONROY: This is more in the realm of the review. I accept that that is the case. I have seen the now minister suggest that the new model would not be paying for those modems—I think this is in some commentary I have seen—that the customers themselves would wander down to the shops and buy them. There is no suggestion NBN Co. will provide those modems?

Mr Heazlett : The issue as to the best method of deployment is an issue that is subject to examination.

Senator CONROY: If NBN were installing the modems, by definition that would involve a truck roll to the person's house?

Mr Heazlett : If NBN did it on a similar basis to that which they currently use, yes.

Senator CONROY: I guess they could post them to them.

Mr Heazlett : An RSP could do it on their behalf.

Senator CONROY: Do you have any international experience on the self-install model? BT perhaps, it having followed the self-install model?

Mr Heazlett : I have not actually reviewed a lot of detail on that, but there is some information around.

Senator CONROY: What does that information tell you?

Mr Robinson : I am not sure we have a lot of information—

Senator CONROY: I think Mr Heazlett said he had some.

Mr Heazlett : There is some, but I have not reviewed it carefully, so I hesitate to try to reflect what it says.

Mr Robinson : These are questions for strategic review, but upgrading of modems et cetera by customers has been a part of the whole development path of telecommunications to date, so if in the end that is the model that is adopted it is pretty consistent with what has happened.

Senator CONROY: Returning to your point before, Mr Heazlett, if you do not get a new modem with vectored VDSL, you do not get any improvement, or virtually no noticeable improvement? That is my understanding of it.

Mr Heazlett : For example, if all you require is something equivalent to a 12-1 service then you do not need a new modem.

Senator CONROY: That is a brave call. The average speed at the moment is four megs, or possibly a little higher—it is somewhere around four but sometimes people suggest it could be eight.

Mr Heazlett : The typical copper run will be shorter.

Senator CONROY: You have a typical copper run?

Mr Heazlett : Currently, under ADSL, most ADSL services come from the exchange and therefore there is a longer copper run from the exchange than there would be from the node.

Senator CONROY: We will come back to that particular gem, I promise. Going back a little further, could you break down the $3.1 billion figure for maintenance of the FTTP opex?

Mr Heazlett : Looking through my documentation—I would have to go back to find the definition. So there is a disaggregation between direct and other. Direct is 2.27 and other is 0.88.

Senator CONROY: Coming back to the self-installation model, which you mentioned you do not have a lot of information on—

Mr Heazlett : I do recall watching a video over the internet of the BT open-reach self-install model.

Senator CONROY: Have BT admitted that self-installation is likely to reduce end user speeds? Are you aware of that?

Mr Heazlett : I do not recall seeing that reference.

Senator CONROY: And you have not received advice to that effect?

Mr Heazlett : I do not recall seeing that specific advice, no. It may have been provided; maybe I missed it.

Senator CONROY: If you are willing to accept that you might have missed the advice, I look forward to you taking it on notice and confirming that so we do not have any misunderstandings.

Mr Robinson : We do get a range of material and we do not always recall it.

Senator CONROY: I am accepting the 'I don't recall' part; I am not accepting 'I haven't received'. Given you do not recall, would you check and confirm that the advice you have received is that BT have admitted that self-installations lead to slower speeds.

Mr Robinson : Yes, we will take that on notice.

Senator CONROY: The government's broadband policy—and I know you had some discussion of this last week—includes provision for the replacement of about 10 per cent of copper lines, which are maintenance intensive. This is the soggy copper policy. Does anyone from Finance have any idea where the 10 per cent figure came from?

Mr Renwick : I could not tell you.

Senator CONROY: It was just plucked. Have Finance turned their mind to it yet? It is a fairly substantial percentage of copper at a serious cost. This is a Liberal Party policy document—the government's policy.

Mr Robinson : Is this figure quoted in the—

Senator CONROY: Ten per cent, I think, is the quoted figure. I will double-check. It is the coalition's plan for fast broadband and an affordable NBN:

The roughly 10 per cent of stand-alone premises served with fTTP after 2014 are assumed to be in areas with the poorest or most maintenance-intensive copper.

Is that parameter government policy?

Mr Robinson : It sounds like an assumption about costs.

Senator CONROY: No, it sounds like an assumption about how much copper needs replacing at a minimum.

Mr Robinson : And, again, those issues will be considered as part of the strategic review.

Senator CONROY: I am just wondering if the government have advised you where they plucked the 10 per cent figure from.

Mr Robinson : I am not aware.

Senator CONROY: What is the consequence for VDSL speeds if in-home wiring is not fit for purpose to receive those speeds?

Mr Heazlett : As with any fixed broadband service, the performance an end user receives will be dependent on their in-home reticulation of the service, and it depends where the consumer has their equipment. If you connect straight to where the terminating device is, there is no impact. If you have in-home wiring that is of a substandard nature, whatever service you have will be of a lower quality, through the degradation of that wiring.

Senator CONROY: That is a good try. Will the strategic review include provision for the soggy copper policy? Is it a parameter where they think it is about 10 per cent? I have seen the terms of reference; they just did not seem to mention soggy copper. We have a couple of experts in soggy copper appearing next. What is the parameter, or has that just been quietly dropped?

Mr Robinson : There are no parameters for the review other than the terms of reference. The cost of remediation, maintenance et cetera of the copper will need to be a consideration as part of that.

Senator CONROY: So it will have to look at that because it is part of government policy.

Mr Robinson : It will need to look at the issue. There is no presumption that it will be any particular number.

Senator CONROY: I want to talk about prioritised rollout. What are the implications for the cost of a network rollout if NBN was directed to start in areas with very little existing infrastructure?

Mr Robinson : Costs would be higher.

Senator CONROY: Can you compare this to a network rollout that was to start in, for example, highly populated, high-value areas and proceed outwards?

Mr Robinson : All things being equal, it would be higher.

Senator CONROY: So do these cost implications depend on the schedule and planning of the rollout?

Mr Robinson : Yes. The new rollout arrangements will depend on the planning of it and the approach adopted.

Senator CONROY: It has been canvassed, and Senator Lundy has very much canvassed it, but I understand the department is conducting a review into the quality and adequacy of broadband availability—that has been talked about. Where are you up to? Have you finished?

Mr Robinson : No, we haven't finished. I would describe it as being right in the middle of the analysis phase and we are working to our deadline, which is within a few weeks. It would be fair to say that the deadlines are really tight and there are a couple of sides to it: one is the analysis and the other will be the presentation of the material, which in itself is a big issue.

Senator CONROY: So I just need to understand: I am relatively familiar with the section but what existing material did you have on hand to make an assessment—let's pick a suburb at random: Williamstown in Melbourne, Victoria—about the state of the copper network in Williamstown, Victoria?

Mr Robinson : We had some material. We needed to check whether it was current.

Senator CONROY: What material did you have on hand?

Mr Robinson : We had some information about where parts of networks were deployed—for example, where the HFC areas were.

Senator CONROY: I am asking about the state of the copper network. You are saying you know where the HFC network was: 2.2 million homes, HFC network, therefore don't have to worry.

Mr Robinson : Yes.

Senator CONROY: Good news: Williamstown, Melbourne, Victoria, does not have HFC. Keep going: what information do you have about the copper network? Sorry, before you progress, does that mean that you have not bothered to assess or make a prediction on the quality of the copper inside the footprint of HFC? You have just said, 'No, we don't have to worry about that. Put it to the side.'

Mr Robinson : No. As we mentioned earlier, we have sought and obtained information about the location of exchanges and pillars et cetera and the deployment of various parts of infrastructure, both ADSL, copper, HFC and fibre-to-the-premise. We are analysing all that and preparing the material at the moment. Our final approach is not settled but, when it is available, we clearly know we will be back in this forum and others explaining it.

Senator CONROY: Just coming back to what information you did have—you are saying you knew where the HFC network was: tick. What information—

Mr Heazlett : I think I would characterise it as we had detail about where ADSL—

Senator CONROY: So you had heat maps to use a phrase. Probably a lot of people in the room have no idea what—

Mr Heazlett : I think we had exchange level detail about where ADSL was available—

Senator CONROY: So you knew which exchanges were ADSL enabled.

Mr Heazlett : Yes, and some level of information about the type of ADSL

Senator CONROY: But you had no information about the copper past the exchanges in the streets.

Mr Heazlett : No.

Senator CONROY: I would not expect you to. It would be great if you did but I just wanted to confirm: your starting base for knowing about Williamstown in Melbourne was you knew nothing about the state of the copper in Williamstown or any other street in Australia when you started the process.

Mr Heazlett : Yes.

Senator CONROY: What information did you ask for? You know where the exchanges are. You know where the pillars are. You know where winds are.

Mr Heazlett : As I understand it, yes.

Senator CONROY: Have I missed anything obvious?

Mr Heazlett : We have asked for data on pair gains—large, medium and small—

CHAIR: All different types of pair gains, no less.

Mr Heazlett : and the availability of ports.

Senator CONROY: You have written to all the telcos, I understand, but obviously Telstra, by definition, is the telco that you need most of this information from.

Mr Robinson : Yes.

Senator CONROY: Have Telstra indicated that there is any problem with supplying you with more detailed information than those physical items? Have they supplied you with information about the copper in the streets?

Mr Robinson : We are still working through the information. I think we are satisfied that we have enough information to do the analysis—

Senator CONROY: They sent you a letter that said, 'In Williamstown, Melbourne, Victoria, the copper in the streets is in good quality, in good state, fit for purpose'?

Mr Robinson : No, they have not, but we are not sure we need that level of information to do the work—

Senator CONROY: Really? To decide who is the most broadband starved in the country, you do not care about the quality of the copper in the street?

Mr Robinson : That is not what I said, Senator.

Senator CONROY: You are not interested in receiving that information? Have you asked for the information about the copper in the pits?

Mr Robinson : I would have to check exactly what we asked for, but—

Senator CONROY: I told you that we were going to be asking you some detailed questions. I am assuming that you have got somebody very handy who can answer that question. Have you asked for the information about the state of the copper in the streets, or not?

Mr Robinson : I will have to take that on notice.

Senator CONROY: I gave you an indication a couple of hours ago, and there must be somebody sitting on an iPad behind you who can say yes or no.

Mr Robinson : I did not anticipate that you would ask me that question, Senator, but I can take it on notice.

Senator CONROY: I am sure there is somebody sitting behind you who can assist us very quickly. Have Telstra provided that level of detail?

Mr Robinson : I do not believe they have provided that material, but—

Senator CONROY: Have they said they can't or that that they won't?

Mr Robinson : As I indicated, we do not think we need that material.

Senator CONROY: How can you tell whether or not you are going to be able to provide a vectored VDSL broadband product to my house in Williamstown, Victoria, if you do not know the state of the copper in my street?

Mr Robinson : Because the report that we are preparing under the broadband quality report is a high-level national picture of the overall availability and quality of broadband. We do not need the individual street details to do that; but, when NBN Co. come to the decision point in each area as to what technology they are deploying, they will be looking at the local detail of the particular picture. It is a high-level—

Senator CONROY: I thought the government policy was to build first where there is the most need. So what criteria are you calculating is the 'most need', because I have got to tell you that I live in Williamstown—as you probably guessed—Melbourne, Victoria, which is the oldest suburb in Melbourne. It has little or no water drainage, because it is the oldest suburb in Melbourne. So, every time it rains, making a phone call in my suburb is a problem. Are you testing your assumptions based on dry weather or wet weather? Does that make a difference in your calculation?

Mr Robinson : We are still doing our work, but it is a high-level overview—

Senator CONROY: So the answer is no.

Mr Robinson : of the broadband quality and availability—

Senator CONROY: So you are not interested in—

Mr Robinson : which means that we are not into the detail of every street.

Senator CONROY: This is a more generic high-level thing. Are you making an assessment based on whether it is wet or dry? Because that makes a material impact on the ability to deliver the product. Come and live in my suburb. I think Mr Murphy is about to give us more than Williamstown, Victoria.

Mr Robinson : We are not looking at the wet and dry conditions of individual streets.

Senator CONROY: So it does not matter for the purpose of this high-level review? It is not a factor?

Mr Robinson : It is not being done in this high-level review. It is not to say that, when decisions are made at individual local areas as to what technology is to be deployed, NBN Co—

Senator CONROY: How can you prepare a review saying, 'We're going to have X amount of fibre to the node,' if you do not know when you hand in the review on Monday the state of the copper network in the streets of Australia?

Mr Robinson : That is a question for how the strategic review is assessing these issues.

Senator CONROY: Some would call that courageous—Sir Humphrey certainly would.

Mr Robinson : I have been answering questions about the work the department is doing. You could direct questions to NBN Co. as to the approach they are taking on that.

Senator CONROY: What criteria are established to determine what defines inadequate broadband? Government policy is that we are going to go where it is inaccurate. What criteria are you using to determine what is adequate versus inadequate?

Mr Robinson : One of our fundamental constraints today on a couple of issues has been that some of the questions you are asking about is work that has been commissioned relatively recently and is underway. In the case of—

Senator CONROY: Which work?

Mr Robinson : This is the broadband quality and availability assessment. It has been commissioned relatively recently and work is underway. Considerable analysis has been—

Senator CONROY: Who has been commissioned?

Mr Robinson : The department has been commissioned.

Senator CONROY: It sounded like you had hired somebody to go and do that. So you have been commissioned. When were you commissioned to do it?

Mr Robinson : At the beginning of October.

Senator CONROY: It is the end of November. Have you determined the criteria you are using to determine what defines inadequate broadband yet?

Mr Robinson : No, but we expect that we will be providing information on a range of levels. It will not be inadequate or adequate; there will be a range.

Senator CONROY: You know what a heat map is? I assume you are familiar with a heat map around an exchange based on ADSL?

Mr Robinson : Yes.

Senator CONROY: A heat map is normally at a distance, irrespective of the quality of the copper or whether it is wet or not. Does a heat map take into account those things?

Mr Robinson : Some do not.

Senator CONROY: So some do?

Mr Robinson : I would think quite possibly—yes.

Senator CONROY: That is news. At this stage we have no criteria for what inadequate broadband is—

Mr Robinson : That is not what I said, Senator.

Senator CONROY: No—you said you had not decided it yet. I asked whether you had and you said no. I am not trying to put words in your mouth.

Mr Robinson : I said the analysis is underway and we have not come to a landing on what—

Senator CONROY: No—I said 'the criteria'. That is what I am asking. I asked, 'Have you determined the criteria,' and I thought you said no, which is what I think you are saying again.

Mr Robinson : I said the analysis is underway and we have not come to a landing on it.

Senator CONROY: So the answer is no. I am expecting you will, but you have not concluded the criteria yet. What are the things that are weighing on your mind? What are the considerations?

Mr Robinson : We anticipate that our report will, firstly, address the methodology we are using, and that goes to your question, and that will look at what the available broadband arrangements are and making pros and cons—

Senator CONROY: Knowing there is a DSLAM in an exchange does not allow you to make an assessment of how good the ADSL connection is on the copper into a home. If you are literally saying it is about whether or not an exchange is enabled with a DSLAM or whatever, that is just not a criterion for actually determining a service to a customer.

Mr Robinson : It is a criterion, Senator. I have agreed that it is probably not the only one there is.

Senator CONROY: Is it a perfect criterion?

Mr Robinson : It is not a perfect criterion, no. We are looking at the range of criteria. Our analysis is underway. There will be a report produced. As the government has said, the report will be a public document. These issues, I might say, will always be debated. We suspect that people will suggest improvements to whatever approach we take.

Senator CONROY: Can I say that the services in Williamstown in Victoria are pretty ordinary because of the state of the copper. I look forward to learning all about Williamstown in your final report. Now I am confused because Minister Turnbull and Dr Switkowski last week said that they are going to be providing broadband to the most underserved areas first. That is what they have said: first. We agreed earlier that the cost implications are going wherever first is outside of the build and that it is necessarily higher. We have determined that. But at this stage, with you not able to provide advice before the review is finished about the areas that are most in need, you cannot determine the cost of a build—that it is necessarily higher; we accept that; it is just a what connects to what and where thing. So how can a review be handed to the minister on Monday that makes any sort of estimate of the cost of building this FTTN network when you have not yet completed a review that explains where they are starting first?

Mr Robinson : I think there is a considerable amount of work that can be done—

Senator CONROY: By Monday?

Mr Robinson : Well, there is a lot of work being done for the strategic review and—

Senator CONROY: I would have thought the most fundamental one was the cost of building this alternative network.

Mr Robinson : There will be a lot of cost information in there and there will be assumptions on which it is based, and that will be reviewed and considered by the government, and there will be new corporate plans.

Senator CONROY: I assume the department has input into and visibility of the review that is taking place by Mr Turnbull's yachting buddy. Are you sitting in on the committee? Is someone from the Department of Finance? Mr Renwick, you could get very lucky—you could get invited on the boat with Mr Rousselot and Mr Turnbull! Do they hold meetings on the boat? Sydney Harbour is very nice this time of year, I've heard.

Mr Robinson : Senator Lundy, I think you would understand that these are not questions we could possibly make any comment on.

Senator CONROY: I appreciate that I have run over time by 15 seconds, so I look forward to continuing the conversation tomorrow. Maybe you will know where the boat is by then. I look forward to seeing you tomorrow, Mr Renwick.

CHAIR: Can I leave you with a question to contemplate on these issues: depending on the copper configuration emanating from various RIMs and exchanges, are you also factoring in, even with the VDSL-style service, whether, if a number of services are being used at the same time—that is, the number of customers that are accessing a data service—that degrades using the proposed FTTN technology?

Mr Robinson : Yes.

CHAIR: Okay. Thank you very much. I will now call our next witnesses to the table—

Senator CONROY: But I do invite you, as I said, to stay and listen to the next witness. I think you will really find that it is beneficial to your discussion around where broadband is most in need.